Google and Mobile Leads IPOs

The outlook for 2013 was driven by the continual activity focused on the new “core” of mobile, social, analytics and security according to PWC. Google’s historic market cap high of $250 which surpassed Microsoft for the first time was also a notable driver. Last year Google’s acquisition to Motorola was the top deal for M&A activity. Google, ever an active acquirer of both large and small companies, completed over 53 transactions (both acquisitions and purchases of intangible assets) with all, except the Google-Motorola Mobility transaction.

Google

The report also highlighted major Internet players continuing to build out their ecosystems in 2013, luring consumers through a combination of hardware and software, content and commerce. As an example of broad sector crossover by Internet majors, Google’s recent acquisitions in e-commerce, the Motorola Mobility acquisition, Google’s Fiber rollout, and Google Glass all provide evidence of such movements. Major mobile players competed for consumers. Trend and future developments of 2, 5 and 10 years from now were in the making.

PWC also stated, Success with consumers will have more businesses looking for a presence in local consumption, most likely through social and mobile apps. Job opportunities are in demand and so is the talent with start-ups are just as often acquired for software and engineering talent. The report states that this now-common practice drives smaller acquisitions throughout Silicon Valley, as more established Internet companies absorb the talent for internal initiatives. Acqui-hires are expected  to continue to contribute to deal volumes for the Internet sector in 2013.

Apps and the power to transform software were also significant. According to the report, the new market opportunities in the App Economy expected to see unprecedented activity in mobile app development, start-up creation and subsequent M&A activity as a means of working new solutions into established portfolios.

Technology, more than in any other industry, had real pressure of disruptive innovation causing technology companies constantly to looking for their next competitive differentiator. Some of the strategies technology companies were seeking to gain were investing in areas such as new talent, new technologies, R&D and M&A.

IT service firms in emerging markets for M&A are also looking to gain local market experience and expertise. PWC’s report states, while cost is still a driver, demand is also a growing factor as mature market firms look to expand internationally to drive growth and customer loyalty for large multinational company clients. In summary, the report highlighted technology companies as increasingly looking to drive holistic solutions for clients. Broad-based technology businesses are continuously looking for value-added services to supplement existing product and service portfolios. Traditional IT services firms are expanding their reach to include other professional services that give them a more holistic offering for their clients.

The largest hardware and networking transactions closed during the year included: Google’s acquisition of Motorola Mobility, a mobile technology solutions provider, for $12.9 billion in the second quarter. PWC also predicted that 2013 will bring more movement on this front as hardware vendors work to round out their converged data center offerings via continued M&A activity. Like software companies, hardware vendors are focused on ecosystems as they work to drive value to their consumer customers. Companies like Apple, Samsung, Google, Microsoft and others have increasingly connected hardware, software and services to content, distribution and other key parts of the ecosystem in order to better control the user experience. We will continue to see this move forward in 2013 as traditional hardware companies seek to compete for consumers.