Apple raises the acquisition stakes

Did they or didn't they?

Financial newspaper Calcalist is reporting that Apple has purchased PrimeSense, a 3D machine vision company whose gesture control technology was used in Microsoft’s original Kinect game controller, for US$345 million. Apple isn’t saying anything, and a PrimeSense spokesperson only added more mystery to the rumours in a discussion with Reuters.

“We are focused on building a prosperous company while bringing 3D sensing and natural interaction to the mass market in a variety of markets such as interactive living room and mobile devices,” the spokesperson said. “We do not comment on what any of our partners, customers or potential customers are doing and we do not relate to rumours or recycled rumours.”

Recycled rumours or not, Calcalist has had a reasonable track record this year. It saw both Google’s Waze offer and Samsung’s Boxee deal coming.

Second kick at the can

This isn’t the first time Apple has reportedly kicked the Israeli company’s tires. In July, PrimeSense refused to comment on rumours the two companies were close to a $280 million to $300 million buyout. Whether or not Apple and PrimeSense actually close the latest deal, one thing is clear: Apple’s hunger for acquisitions continues to grow. In an interview at the All Things Digital conference in May, Apple CEO Tim Cook confirmed the company had acquired nine companies since its fiscal year began in October 2012. During last month’s Q4 earnings call, Cook said the company had completed 15 “strategic acquisitions” during the fiscal year, a major bump over Apple’s typical rate of approximately six acquisitions per year.

Beyond the numbers, the specifics of some of this year’s acquisitions paint an increasingly detailed picture of where Apple intends to go, and how it intends to control and protect its complex global supply chain along the way. They include:

Navigation
Toronto-based Locationary, acquired in July, gives Apple a major boost in its efforts to close the gap between Apple Maps and the more capable Google Maps. It compiles user-submitted data into searchable databases that help customers find businesses near them. Hopstop, acquired in July, and Embark, bought out in August, specialize in walking information and public transit, respectively. Indoor navigation specialist WiFiSLAM , purchased in March for a reported $20 million, brings location-based smarts to shopping malls, stadiums, underground networks and other areas inaccessible to traditional GPS.

Hardware
Passif Semiconductor , acquired in August, makes low-energy chips that can help Apple squeeze more battery life out of its mobile devices. This builds on its earlier acquisitions of Intrinsity – reportedly responsible for the core processor architecture of iOS devices – and Anobit, an Israeli fabless semiconductor company that specializes in flash memory controllers crucial to the solid state drives in its MacBook Airs, iPads and iPhones.

Software
Matcha’s multimedia content recommendation technology streamlines finding – and selling – material on iTunes. The acquisition, announced in August, builds on last year’s acquisition of Chomp, an app discovery specialist.

Apple’s decision to hit the gas on acquisitions betrays its goal of tightening an already tight supply chain. Greater verticality gives it more control, keeps competitors at bay, reduces time-to-market and allows it to maintain an innovation edge in the face of Google’s overwhelming Android wave.

Still to be addressed is the very heart of its iOS universe. For the time being, Apple continues to source A7 processors from Samsung, and recently signed a deal to buy A9 chips from the Korean tech company starting in 2015. But as the two companies increasingly clash in court and the open market, the worsening legal relationship between them will only serve to stoke Apple’s M&A fire even more. Whatever happens with PrimeSense, don’t expect Apple to put its wallet away anytime soon.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca