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Apple Outspent Google in Acquisitions Last Year, but What of In-House Innovation?


Although not known for being as "acquisition happy" as its competitors, Apple quietly reported total investments of $11.12 billion over the last five quarters.

With all the leaks and dead-on predictions that now precede the debut of most of Apple's (NASDAQ:AAPL) products, one would think that the company's days of clandestine business maneuvers were long gone. However, right underneath our noses, Apple has quietly been on a spending spree, snatching up talent, technology, and production capacity for billions. In fact, Apple even outspent the acquisition-happy Google (NASDAQ:GOOG) in 2013 -- no small feat given Google's propensity for making multibillion-dollar buyouts like they were a drop in the bucket.

According to its regulatory filings, Apple has spent $11.12 billion in total acquisition investments along with $1.20 billion in cash "business acquisition" payments over the past five quarters. (Apple files acquisitions into three groupings: "Payments made in connection with business acquisitions," "payments for acquisition of property, plant and equipment," and "acquisition of intangible assets.") But those figures far outpace the accumulated dollar amount tech analysts have reported when the occasional Apple buyout is made public. Over the last quarter, Apple's purchases of Cue, PrimeSense, and Topsy only came to $595 million. As for the rest of the cash, we seem to only have part of the story.

In a shareholders meeting last Friday, CEO Tim Cook made mention of acquiring "23 companies over 16 months." But as VentureBeat's Jordan Novet noted, only 16 of those 23 companies are publicly known. Beyond that group -- which includes HopStop, BroadMap, WiFiSlam, and Burstly -- it's a total mystery.

Clearly, it's to Apple's advantage to keep many of these acquisitions shrouded in secrecy. A publicly known buyout by a major player is a signal to other tech giants about where the industry is likely headed. For example, nobody will be surprised if and when Google forges headlong into home automation after its $3.2 billion purchase of Nest Labs, maker of the popular smart thermostat, in January of this year. (See: Google's Nest Buyout Raises Privacy Concerns.) And it wouldn't be surprising if other companies have begun their own home-automation projects after the Nest buyout was made public. By keeping its cards close to its chest, Apple isn't telegraphing any information about where it's headed next to its competitors.

And while some of the acquisitions are a mystery to anyone outside the hallowed halls of Cupertino headquarters, the very fact that Apple has outpaced Google, of all companies, in buyouts is a total surprise -- considering Google's history of plunking down $12.5 billion for an ailing smartphone manufacturer. Taking Apple's three "buckets" out of the equation, Apple forked over $9.45 billion in 2013, compared to Google's $8.81 billion, according to the regulatory filings of both companies.

Tim Cook said in last week's shareholders meeting that Apple wasn't engaging in an acquisition race or out to see which company could pay the most -- possibly a thinly veiled reference to Facebook's (NASDAQ:FB) unbelievable $19 billion buyout of WhatsApp. However, simply looking at its numbers, Apple isn't exactly abstaining from the whole acquisition scene altogether.

With over $150 billion in cash on hand, Apple has the freedom and comfort to buy outfits like WhatsApp many times over. But in doing so, it must remember that true innovation comes from the blood, sweat, and tears of in-house development.

Simply put, nobody can buy their way to the top -- not even Apple.

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