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Old Jan 18, 2013, 10:59 AM   #1
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How Steve Jobs Buys a Company and Why Apple Bought Lala




Aubrey Johnson, a former Color employee, shares two stories behind the scenes at Apple's acquisitions of both Color and Lala -- both firms were founded by Bill Nguyen before being acquired by Apple for two very different reasons.

Like Pandora, Lala's music was streamed from the internet rather than stored locally. This allowed users to listen to a catalog of over 7 million songs for free as a stream over the web -- much like Pandora or Spotify today. Songs could also be purchased and downloaded, typically for a lower price than iTunes was offering.

Johnson writes that Lala's biggest strength was that it was at or near the top for many Google searches of particular songs, thanks to a search placement deal with Google. As a result, the firm was siphoning sales away from iTunes. As well, Google and Lala had partnered on Google's Music service. Both Nokia and Google made lowball offers for the firm, and Nguyen headed to Apple to see if they'd be interested in buying his company.
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In late November [2009], Nguyen was seated at the dinner table in Steve Job's home on Waverly St in Palo Alto. Also present were Eddy Cue and Tim Cook and other Apple executives. Steve led the conversation while eating a beet salad:

"I'm going to give you a number, Bill, and if you like it, let's do it and just be done with this whole thing. Okay?" Bill agreed.

Jobs passed a piece of paper to Nguyen and Bill nodded. The deal was done.
After the acquisition, a number of Lala employees left the company with Nguyen, leaving millions in options on the table. Later, Apple apparently bought back some of those same engineers when the company purchased the remnants of Color, getting more experienced personnel for a significant savings.

Update: Johnson's post has been removed.

Article Link: How Steve Jobs Buys a Company and Why Apple Bought Lala
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Old Jan 18, 2013, 11:02 AM   #2
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Now all they have to do is apply the same tactics again and acquire Google
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Old Jan 18, 2013, 11:05 AM   #3
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Now all they have to do is apply the same tactics again and acquire Google
Why would you want them to? And what makes you think there's any chance they could remotely afford to?
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Old Jan 18, 2013, 01:23 PM   #4
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Why would you want them to? And what makes you think there's any chance they could remotely afford to?
This. I love Apple, but I dont want Apple to control the entire market.
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Old Jan 18, 2013, 11:05 AM   #5
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Originally Posted by tevion5 View Post
Now all they have to do is apply the same tactics again and acquire Google
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
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Old Jan 18, 2013, 11:50 AM   #6
M-O
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
Well, they are both publicly traded companies. Lets take a look at last quarter's results...

GOOG: 14b revenue, 2.7b profit
AAPL: 36b revenue, 8.2b profit.

Last edited by M-O; Jan 18, 2013 at 11:55 AM.
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Old Jan 18, 2013, 11:54 AM   #7
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
Search Engine, Customer gets to use it for free
Android, Third Parties get to use it for free
Maps, Customer gets to use it for free
ETC, Customer gets to use it for free

Questions:
How many people actually pay attention to the ads on Google searches?
How many people still access Gmail via the web and see ads, vice accessing Gmail from an Email Client that does not show ads?
How many people pay attention to the ads on Google Maps?

I use Google services, but hardly ever see the ads or give the ads any consideration. And I think a lot of people are the same.

To me this means a couple things:

1) Advertisers will eventually understand the returns for there investment in advertising with Google is not worth it and they will either not advertise on Google or pay less to advertise on Google.

2) Google will be forced to make ads more obtrusive to the customer.

3) Google is selling the customers information, which may eventually piss off the customer. Some people like privacy.

Google does not have any physical products that they sell for a profit (if there is profit, the profit margins on the Nexus line are nil for Google). Google's online services are (monetarily wise) free for the customer. How does that make them any money close to the profit margins that AAPL makes?
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Old Jan 18, 2013, 02:55 PM   #8
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Originally Posted by jamesnajera View Post
1) Advertisers will eventually understand the returns for there investment in advertising with Google is not worth it and they will either not advertise on Google or pay less to advertise on Google.
I think you've got some wong information.

I work in a small 100-person company in Denmark. We spend about €30.000/year on adwords - about 7€/conversion. Google Adwords has by far the best return on investment.

I'm pretty sure Google has this ad stuff figured out way better than anyone else.
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Old Jan 20, 2013, 08:07 AM   #9
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Originally Posted by jamesnajera View Post
3) Google is selling the customers information, which may eventually piss off the customer. Some people like privacy.
This is exactly why I dislike google. They do have some good products/services. But this point you make, really stops me from using them.
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Old Jan 18, 2013, 11:54 AM   #10
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
Seriously... where do you get your facts? Have you even looked at the financial statements? Who is your source for this information?
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Old Jan 18, 2013, 12:02 PM   #11
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Originally Posted by Yujenisis View Post
Please explain.

I agree that without Google the Internet would be a very different, and arguably less useful place. Google revolutionized search and forced every other player to adapt or die.

Anyone else remember the smattering of search engines one used to employ for different types of searches before Google came along and changed everything? I do.

Still, I can't really see how a Google-less world would have any significant effect on Apple. Well, except without Google Microsoft might still be relevant and Apple fanboys would still be fighting Microsoft fanboys...
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Originally Posted by need4speed View Post
Seriously... where do you get your facts? Have you even looked at the financial statements? Who is your source for this information?
Google.
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Old Jan 18, 2013, 12:14 PM   #12
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Originally Posted by Squilly View Post
Google.
If you used Google correctly, you'd see Apple makes more money in a quarter than Google makes in a year.

The lack of financial understanding is truly hilarious in this forum...hahahaha
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Old Jan 18, 2013, 12:15 PM   #13
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
"Chances are," huh? Wow. Do you really think you can lie about stuff like this?

Let's look at Q3 2012 earnings for Apple and Google, the most recent quarter for which both companies have data.

Google reported about $14 billion in revenue, and Apple reported… let's see… $35 billion.

Oh, and you mentioned Android?
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Old Jan 18, 2013, 12:29 PM   #14
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Originally Posted by Squilly View Post
Google.
You need to learn how to use Google then.
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Old Jan 19, 2013, 04:22 AM   #15
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Originally Posted by need4speed View Post
Seriously... where do you get your facts? Have you even looked at the financial statements? Who is your source for this information?
Apple has more revenue in a quarter than Google has in a year at times. However, they are not yet reporting Motorola Revenues so the numbers are skewed.

Prior to the Moto acquisition though, this is a stupid argument for anyone to have. It's an Apples to Oranges comparison.

These two companies have little in common other than mobile software, and where Apple has attempted to mimic some Google offerings they've failed miserably. At it's heart, Apple is a hardware company and Google is an internet services company.

A company does generate more revenue when selling a physical object, something Google really has not done before this past year.

And most of the people commenting have not looked at any financial statements, including yourself or you could quote them. Google averages about $18 billion in rev per quarter and Apple $27. Take away Apple's hardware revenue, and Google would be the winner. Again, apple to oranges comparison.

What next, why don't we compare Wal-Mart to Best Buy since they have 1 over lapping sales category?
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Old Jan 18, 2013, 12:02 PM   #16
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Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
So, when are you planning to get out of the cave?
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Old Jan 18, 2013, 12:41 PM   #17
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
This is like saying market share is more important than profit margins. Yes, Google makes milions and has their fingers in a lot of [free] pies, some of which become revenue streams, but they are making a mess of their search engine with all of the changes. Their recipe for success was simplicity, and search results are no longer simple. Good thing the results are good enough for most people.
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Old Jan 18, 2013, 12:56 PM   #18
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This is like saying market share is more important than profit margins. Yes, Google makes milions and has their fingers in a lot of [free] pies, some of which become revenue streams, but they are making a mess of their search engine with all of the changes. Their recipe for success was simplicity, and search results are no longer simple. Good thing the results are good enough for most people.
Guess it is only the canadian Google engine that is broken? US one still works fabulously and is not a mess.
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Old Jan 18, 2013, 01:03 PM   #19
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple.
... are you serious?
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Old Jan 18, 2013, 01:13 PM   #20
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
Are you 10 years old? Do you even know what a financial statement is?

If you are at all not living in a ditch and have basic reading comprehension then you would realize that Apple's profits and corporation as a whole is more stable than Google.

Also funny is how you could Google quarterly results for each of these companies and compare them yet you choose to make ignorant statements instead.
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Old Jan 18, 2013, 01:19 PM   #21
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
Chances? There are facts and numbers, friend. Apple is the most profitable and most valuable company in the industry. There aren't chances anywhere. Both are public companies with public numbers.
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Old Jan 18, 2013, 03:02 PM   #22
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
All which don't turn a profit. Their revenue source is ads. Yeah they may make a nickle or two from other things but nothing like their ad revenue, and even that is dying down.
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Old Jan 18, 2013, 03:15 PM   #23
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
"Chances" are? Thank goodness we live in a world where historical financial results aren't left to chance but are, you know, written down.

Here are the two companies Revenue graphed for the last few years.

And here is the same thing but for profit.

I'm not going to use that data to make an argument though, because the current arguments are silly. Still, this information is not hard to find, and shows how far off ones "perceptions" and chance taking can be.
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Old Jan 18, 2013, 06:21 PM   #24
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Originally Posted by Squilly View Post
Chances are Google has more revenue & profits than Apple. They have a search engine, Android, RELIABLE Maps, etc.
Wrong on both counts. Yet, if you went to Google Finance you'd have never bothered to write such wishfulfillment.

Aside from the fact yearly gross revenues of Apple are $150 Billion in 2012 to well over $200 Billion for 2013, and will have around $140 Billion cash and long-term investments:

Apple's Total Debts to Assets: N/A
Google's Total Debts to Assets: 6.92 to 1

Apple's Total Debt to Equity: N/A
Google's Total Debt to Equity: 9.12 to 11

Previous Income Statement of each prior most recent Quarter:

Apple: $35.966 Billion
Google: $14.101 Billion

Apple Earning Guidance for this quarter to be disclosed Jan 23.

$52 Billion @ $11.75/share

Street Consensus:

$54.5 Billion @ $13.23/share

Gross Margins:

Apple: 40.04
Google: 53.92

Net Profit Margins:

Apple: 22.86
Google: 15.43

Employees:

Apple: 72,800
Google: 53,546

Besides the poor Net Profit Margin showing, nearly 1/3rd revenues, etc., Google has a very large employee count at much higher salary profiles [They don't have Retail] and these are three variables of unattractive long-term stability.

Apple gets more productivity out of less technical resources than Google [never mind superior hardware/software] and that will only expand over time.

Google's inevitable reality is what to do with Samsung regarding Android. Google will want to take sales from them while competing with Apple.

Expect once Samsung's wars with Apple tamps down that Google starts confronting their own partners in more direct competition.

Amazon has arrived and is really threatening Google where it should have invested in more: The Cloud. Enterprise Storage is Amazon's bread n' butter. It's owning Google.

Price War on Cloud Storage: http://www.forbes.com/sites/greatspe...torage-prices/

Meanwhile, Apple can quietly expand its Data Centers for iCloud [multiple locations] and then come out and wow the audience with storage options for Mac customers no one expects.

Last edited by mdriftmeyer; Jan 18, 2013 at 06:48 PM.
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Old Jan 18, 2013, 07:39 PM   #25
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Originally Posted by HenryDJP View Post
The reason this country is in a financial mess is because people are "consumers". They spend money senselessly.....
The 'scourge' of credit card debt; we're digging ourselves a hole, we can't get out of.

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Originally Posted by jamesnajera View Post
I believe Steve did have a sit down with President Obama. Two things they talked about were a tax holiday for business, and public education. I think Steve was not happy with the taxes for foreign income, and Steve was not happy with the cost of public school education vs the quality of education coming out.
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Originally Posted by nep61 View Post
If Steve were alive, he'd be invited to sit with Obama to figure a way out of the Finacial mess this country is in..... He maybe couldn't fix it right away, but there would be some unique ideas thrown out there, I'd bet !
He did have that first dinner meeting in Feb 2011, http://www.csmonitor.com/USA/Electio...erm-presidency when he also told Obama that he was headed for a one-term presidency, so that hypothetical second meeting might have been somewhat uncomfortable.
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