The 10 Most Significant Tech Acquisitions Of 2011
Billion-Dollar Mergers And Acquisitions
Mergers and acquisitions are a regular occurrence in the IT industry and 2011 had more than its share. Companies spent billions to make acquisitions in an effort to strengthen their competitive stance (Oracle and RightNow, Dell and Force 10 Networks), expand their technology portfolio (Intel and McAfee, Microsoft and Skype), spark strategic initiatives (SAP and SuccessFactors, Hewlett-Packard and Autonomy) – or just get bigger (AT&T's efforts to buy T-Mobile).
Here are what we considered to be the most significant acquisitions in the IT industry in 2011. Some are done deals, some are still pending, and some may never happen. Note that while the cost of acquisitions was a factor in the ranking, some acquisitions are on our list because they were strategically important, even if they didn't carry huge price tags.
10. CenturyLink Buys Savvis For $3.2 billion
In what was seen as a bold response to Verizon's acquisition of Terremark CenturyLink moved to acquire cloud and hosting service provider Savvis in April and completed the deal in July. The telecom service provider paid $2.5 billion in cash and stock and assumed $700 million in Savvis debt, putting the final price tag at $3.2 billion.
While some considered it an expensive deal, the addition of Savvis gives CenturyLink, traditionally a telephone and Internet service provider, a major presence in the cloud and hosting services market. Like Verizon's purchase of Terremark, the Savvis deal could be a sign of things to come as the telecom market continues to consolidate while interest grows around cloud services.
9. SAP Moves To Buy SuccessFactors
In early December application giant SAP struck a deal to acquire SuccessFactors, a developer of Software-as-a-Service human capital management applications, for $3.4 billion.
It was certainly one of the larger tech acquisitions in 2011 from a cost point of view -- and some questioned whether SAP had overpaid for the cloud software vendor, given that in the first nine months of 2011 SuccessFactors reported a loss of $30.7 million on sales of $231.7 million.
While SuccessFactors has growth potential, SAP CEO Bill McDermott said an equally compelling reason for buying it was SuccessFactor's expertise in developing and deploying cloud-based software -- something that SAP, whose roots are in selling big ERP applications to big companies, has been trying to do on its own. SAP is buying a change agent. "We'll take the [cloud] DNA from SuccessFactors and bring that to the SAP cloud," McDermott said.
8. AT&T's Failed $39-Billion Bid For T-Mobile
In March AT&T announced a deal to acquire T-Mobile from Deutsche Telekom for $39 billion ($25 billion in cash and $14 billion in stock) in a move that would make it the largest wireless carrier in the U.S., surpassing Verizon Wireless. In addition to adding T-Mobile's 34 million subscribers, AT&T is counting on the acquisition to help it improve the quality of its service and expand coverage.
But the deal hit a roadblock in August when the U.S. Department of Justice filed suit to stop the acquisition, arguing that it would lead to reduced competition. AT&T also was hit with suits from competitors Cellular South and Sprint, as well as a handful of states, to block the deal.
Acknowledging that mounting opposition and federal regulatory challenges had become insurmountable, AT&T finally threw in the towel. On Dec. 19 AT&T and Deutsche Telekom, T-Mobile's parent company, agreed to end plans for the merger, making it the year's biggest acquisition that wasn't.
7. Dell Buys Compellent
Dell made a big splash in February when it completed it's $940 million acquisition of Compellent, one of the industry's leading storage virtualization technology vendors. The move, announced at the end of 2010, instantly made Dell a major force in the storage market and furthered its efforts to offer customers a broad line of data center systems.
Already a player in storage thanks to its 2008 acquisition of EqualLogic, Dell had attempted to buy 3PAR in September, 2010, but lost out to Hewlett-Packard in a bidding war.
The Compellent acquisition, combined with the purchase of Force10 Networks, boosted Dell's competitive position among suppliers of converged infrastructure for data centers, putting it among such company as HP, Cisco and Oracle.
6. Google Bids For Motorola Mobility
In August Google offered $12.5 billion to buy Motorola Mobility Holdings, a move seen as strengthening Google's presence in the mobile phone and computing markets, and providing a boost to Google's Android mobile operating system.
Motorola Mobile Holdings, created earlier this year when Motorola split into two companies, markets Motorola handsets and mobile devices, set-top boxes and cable equipment. While the deal has been approved by Motorola Mobility shareholders, it sparked a review by the U.S. Department of Justice, which is examining the acquisition for possible antitrust issues.
Google has indicated it will cut some 800 jobs from the Motorola Mobility workforce once the acquisition is completed.
5. Verizon Seeks Cloud Edge With Terremark Buy
Verizon kicked off 2011 with a big move to bolster its cloud computing strategy: The $1.4 billion acquisition of Terremark Worldwide, a rising star in the cloud computing and Infrastructure-as-a-Service fields.
After the acquisition was completed in April, Terremark became a wholly-owned subsidiary of Verizon and gave the telecom giant the muscle it needs to execute its ambitious cloud computing strategy, which includes an "Everything-as-a-Service" approach. But perhaps just as important, the deal kicked off a wave of cloud computing acquisitions throughout the year and now seems to have changed the traditional telecom business model.
4. Dell Expands Networking Capabilities With Force 10
Dell acquired Force 10 Networks for an undisclosed sum in August in a move to give the computer maker a broad line of converged networking and data center products to help the vendor compete with Hewlett-Packard and Cisco.
While Dell made a number of acquisitions in 2011, the Force 10 buy added a whole new dimension to Dell's competitive stance. In October, for example, Dell said it would integrate Force 10 products and compression technology it acquired through its buyout of Ocarina Networks into its DX Object Storage Platform to create data center systems for midmarket and enterprise customers.
While Force 10 sold primarily direct, Dell executives vowed to use the acquisition to build up a networking channel program. "We see this as a way to expand and develop a much more robust networking channel within Dell," said Brad Anderson, senior vice president of Dell's Enterprise Solutions Group.
3. Intel Acquires McAfee
While this deal was announced in August 2010, it wasn't wrapped up until February of this year.
So how's it working? McAfee president Dave DeWalt stepped down in July, a development that had channel partners fretting about a possible Intel-imposed channel restructuring. But those fears dissipated in August when McAfee launched a new deal registration program and increased margins for commercial/enterprise sales by 25 percent.
The acquisition also appeared to be succeeding from a technology perspective. In August McAfee execs disclosed plans for the "Patmos" Intel-McAfee platform for embedding security within silicon microprocessors. Another sign of Intel-McAfee synergy was McAfee's Deep Defender product based on the DeepSafe technology jointly developed by the two companies. At McAfee's annual Partner Summit in October, Intel execs expressed satisfaction with McAfee's technology and channel expertise.
2. Microsoft Makes Acquisition Call To Skype
In May Microsoft stunned the industry when it disclosed a deal to acquire popular Voice-over-IP service provider Skype for $8.5 billion. The move gives Microsoft a way to bolster its IP communications strategy and give it a new foothold in consumer markets where it had struggled.
Microsoft completed the acquisition, the biggest in the company's history, in mid-October. Now comes the work of integrating Skype with many of Microsoft's products including the Lync unified communications software, Windows Live Messenger and Windows Phone.
1. Hewlett-Packard Acquires Autonomy
On August 18 Hewlett-Packard disclosed a plan to acquire Autonomy Corp., a developer of information management and infrastructure software, for a whopping $10.3 billion.
The deal, seen as a bold move by some and an expensive mistake by others, was CEO Leo Apotheker's first major step toward boosting HP's software sales from a paltry 3 percent of total revenues. It was HP's biggest software deal ever and one of the biggest tech acquisitions this year.
Trouble was, Apotheker got the boot just one month later and some predicted HP wouldn't go through with the deal. But HP wrapped up the acquisition in October and customers and partners await detailed plans for how Autonomy will be integrated with the rest of the company.