In a Quixotic kind of way, SAP's acquisition plans announced last week for Sybasegot me thinking about another deal that's made the rounds over the past couple of years: Apple and the potential take-out of Electronic Arts.
Sybase had been talked about as an acquisition target for years, with suitors alternating between SAP, IBM, Hewlett-Packard, Oracle. There's been lots of reasons why a deal with any of them would make sense, and finally, SAP pulled the trigger and the deal was done.
And while Electronic Arts has been mentioned as a possible takeover target by a number of "likely" suitors, ranging from Microsoft to Disney, the one that makes sense is Apple.
I know, I know: EA being acquired by Apple is an oldie, but it's still a goodie!
With Electronic Arts' most recent disappointing earnings, and its stock much closer to its 52-week low than high, and a market cap of only $5.7 billion, now would be as good a time as any for Apple to make a move. Apple's got the cash, EA is a far cheaper alternative than Activision, the tech industry overall seems to be in an acquisitive mood, and even Apple has opened up its checkbook recently for some key, though relatively small, deals.
The payoff could be handsome.
Sure, Apple is making major headway in the gaming arena with its App Store, and the 50,000 game titles now available for the platform. EA is a major contributor in that. Apple's iPad is selling remarkably well, and Apple is proving that so-called casual games can be lots more than merely casual. Mobile gaming is clearly closing the gap with its far more complex console colleagues in the marketplace and while there still might be a ways to go, Apple seems to be getting there. Consider for a moment that Apple marries its mobile platform with a new version of AppleTV, and all of a sudden, your smart phone and iPad become game controllers for the big screen TV in your den. By default, the Apple platform becomes a fourth console alternative that competes with the Nintendo Wii, Sony's Playstation and Microsoft's Xbox 360.
But even before that scenario comes to pass, take a look at the trends in gaming right now. Console sales plunged last month. We all gasped at the NPD numbers from last week that showed total game sales dropped 26 percent last month to $766.2 million compared to a year ago, and were cut in half from the $1.52 billion in March. The console part of the business was downright depressing: Wii sales were a paltry 277,200 units, half the figure in March, and below the 340,000 reported a year earlier; the Xbox went from 338,400 units in March to 185,400 in April, and actually saw a slight increase from the 175,000 in the same period last year; Sony's PS3 also saw a nice gain from a year ago, with 180,800 units sold in April, compared to the 127,000 a year ago, but way off the 313,900 in March. The Nintendo DS and the Sony PSP also suffered severe month to month and year-over-year declines.
Yet, mobile gaming is soaring, jumping 19 percent to $5.6 billion, according to Gartner. Sure, the vast majority of these games are still free, but as the consumer becomes more mobile, and more content is stored in the Cloud, mobile gaming stands to be a much better revenue/profit performer, and soon.
EA generates boatloads of money developing for Windows PCs and other consoles. And that might be something to dissuade Apple from a play for EA. But there's nothing preventing Apple from controlling EA properties, leveraging its talent and making all those dividends -- many of those dividends? -- widely available on the platforms on which they exist today, but showing the gaming community how much better the experience inside the Apple ecosystem can be.
We all know that Apple doesn't tend to invent, it re-invents.
We saw it with the personal computer. We've seen it with mobile music, and with iTunes, the music industry itself. We've seen it with smart phones. We're watching it with tablet computers. And everyone seems to be looking at the television as the next big frontier for Apple to focus on. Smart TV's show some promise. Just ask Google, and Sony, and Intel. Or even Cisco Systems for that matter. But when you see the video games industry, which eclipsed the movie industry as far as annual revenue is concerned, and you see the direction consumers are moving in, and the challenges today's gaming industry faces -- both on the hardware and publishing side -- the whole ecosystem is ripe for a revolutionary change. It seems Apple is best positioned to transform it, and bringing Electronic Arts into the family could be a bold step in that direction.
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