why Apple should buy Sony?

Thursday, November 1, 2007

When a company becomes as big as Apple is today, acquisitions become a way to grow quickly and increase synergy towards major corporate goals. Apple long ago stated its
target of living room convergence with video, computer and music, all interactive with the Mac. AppleTV is the first element of that convergence. Steve Jobs has publicly stated that he admires Sony. Apple and Sony go way back in minor collaborations. My first laptop was a PowerBook 100, an Apple Mac manufactured by Sony.

Sony represents some great building blocks to make the transformation of Apple Computer into Apple, the electronics company. Owning Sony would combine the strengths of two great companies into a conglomerate that might blow the competition away. Sony has recently lost its way and needs focus to regain its former glory. Its value is down enough to make it a takeover target in the right situation. Look at the intersections of interest between the companies.

Sony of course, owns PlayStation, which would give Apple the game franchise it lacks. Apple could use that block in building the electronic living room of the future. How would you like to run PlayStation games on a Mac or in HDTV format on your Sony theater HD video display? How about a Sony HDTV camcorder with a built-in hard drive built in that records video in a format that would allow your Mac to use that video directly in the camera and then burn to a Blu-Ray disk, without ever transferring the video into the computer. Electronic devices are commonly "close but no cigar" to doing the cool things that are so "Apple." Sony needs that extra "cool factor" that they have lost sight of over the years, that instinct to know what customers really want is what Apple has in spades.

Blu-ray is another Sony property that Apple can help Sony build on. Apple is one of the early adopters of the Blu-ray high definition video format and we will see Blu-ray disk drives in Macs very soon. The "Apple falling on the Blu-ray side of the fence" will help stop HD-DVD (Toshiba) and make Blu-ray the standard HD disk format. Apple is far and away the innovation leader in computer technology and Apple controlling Blu-Ray technology would send a powerful message; and don't forget the revenue stream from licensing Blu-ray.

Sony TV sets are some of the best video displays in the market place. Like Apple, Sony tends to be the quality leader in it's products. Apple could help Sony focus its R&D, spell that "Steve Jobs," Mr. focus himself. The world class product design of Apple combined with Sony could create an entirely new design engine that might revolutionize our living rooms in 5 years time. Sony has been losing ground on it's market share of big screen TV sets, perhaps Apple can help them design wise, especially with user interface and connect-ability.

Sony holds a lot of patents (over 25,000 US Patents) that combined with Apple technology would be a powerful collaboration of synergy. Intellectual property alone, makes the collaboration interesting, let alone the market and manufacturing implications. The international aspect of Sony and Apple would wear out Steve's old jet, and allow him to buy a nicer brand new one. (Steve, you deserve it) This combination might help Apple sell Macs and iPods in Japan. Remember the halo effect.

Sony pictures and music is an additional property that Steve might find useful, since he's Disney's largets individual shareholder anyway. With the entire Disney and Sony film library in the iTunes store, you have instant content, to make the lagging Apple TV device succeed. Content, content content! Sony's music portfolios and recording companies in addition to the extensive movie library are very valuable to Apple for exclusive sale though the iTunes store. Why negotiate a deal when you can just own them?

Some Sony products that are lagging could be discontinued such as Sony's lackluster music players in favor of iPods sold through Sony distribution. Keep in mind the Sony distribution channels are well established and have valuable marketing aspects Apple might well use to its advantage. Sony has a repair system in place to help with electronic repairs across the board. Some Sony assets could be sold off to help pay for the purchase.

Apple has a big fat bank account, a virtual mountain of cash and perhaps it is time to spend some of it to control Sony. There are a lot of creative ways to do it and I wonder if the thought has crossed the mind of Mr. Jobs. I am thinking Wall Street would like the idea. And Sony might even favor a merger as well. As a die hard Mac fan I can only hope that as Apple grows, it never ceases to be the "Apple" that us Mac fans know and love!