Recent merger and acquisition activity in the technology industry demonstrates the emergence of three megatrends: the “blurring of everything,” “mobile everything” and “smart everything.”
Together these trends are moving the global economy and regional societies toward ubiquitous connectivity and real-time access to actionable information. And all these value-creating and potentially disruptive technology trends point to further increases in M&A activity throughout the rest of 2010.
The “blurring of everything” refers to the globalization and convergence of technology industry sectors, of technology with other industries, of technology platforms — and ultimately, of everyone’s business and personal lives. For technology companies, cloud computing is profoundly blurring, and we identified at least two dozen deals related to cloud computing.This suggests a continuing transformation of technology industry business models around cloud-based services.
Even better represented were deals involving social networking, where we identified nearly three dozen deals in which the targeted companies ranged from businesses that map relationships among social network participants (for subsequent marketing purposes) to patient community websites.
Social networking technologies contribute to the “blurring of everything” as well as to “smart everything.” Smart everything refers to information gathered from smart stand-alone and embedded devices, such as sensors, power gauges and smartphones, as well as the information generated by social networks — information that could not heretofore be tapped and analyzed.
“Mobile everything,” however, is the technology trend that drove the most deals in the first quarter. We identified approximately 40 mobile-related deals. While mobility has been an important driver of M&A for many years, we noted a subtle shift in the first quarter of 2010 as the proportion of infrastructure-oriented deals diminished in comparison with mobile-related deals focusing on applications, content and advertising — with an eye toward convergence of mobile and fixed network usage. Based on these deals it is not hard to imagine a near future in which the mobile ecosystem, backed by cloud services, enables a plethora of new and disruptive capabilities and business models.
Examples of mobile-related deals in the first quarter include the purchase of a mobile advertising platform company by one communications equipment provider, while another acquired a software company that delivers syndicated content, related media and services to mobile devices. Another mobile deal involved cloud services that provide mobile users the ability to access content on PCs as well as mobile devices. On the mobile infrastructure side, a provider of systems that allow network operators to deliver services with a single pricing approach across multiple underlying networks (including fixed and mobile) was scooped up by a major software company.
Additional “smart everything” indicators can be seen in the nearly three dozen health care IT transactions that took place in the first quarter and another two dozen deals related to clean energy technologies. In both cases, typical deals involve software or services that help collect, process and analyze information, often in new ways and sometimes even involving information types that have not been available until recently, such as the information aggregated from social media (mentioned above), or individual power usage data. These deals demonstrate how information processing and analysis technology is enabling innovation across a range of industries.