Everything We Know Apple, Inc. Bought In 2014 – And What It Means for 2015 And Beyond

This article was originally published on Fool.com

WASHINGTON, DC As 2014 winds down, its a good time to review Apples (NASDAQ: AAPL.US) year. While the Mac maker performed incredibly well, with shares up 36% year-to-date, lets look specifically at the companys acquisitions. Apple had a historic year in this department, in more ways than one.

2014 had the biggest
The obvious headliner here is Beats. At $2.6 billion, Beats is Apples largest acquisition in history by far (that we know of). Prior to Beats, Apples purchases typically topped out at or around $500 million. The company acquired flash specialist Anobit a few years back for upwards of $500 million, which was more than the $404 million it paid to bring Steve Jobs back to Apple via the NeXT acquisition.

In Beats, Apple gets a premium headphone business that dominates its market segment, a small but growing streaming music service, and most importantly, talent. That includes the Beats execs that have deep ties within the music industry, but also the human curation team that differentiates Beats Music.

This isnt the only way that 2014 stood out, though.

and the most
This year isnt quite over yet, so investors dont know how many companies Apple may acquire in the fourth quarter. Apple did confirm that it picked up Seattle-based cloud networking start-up Union Bay Networks in November, but thats about all investors have caught wind of.

But if we go by fiscal years, we can see how Apples acquisition strategy has evolved in recent years under Tim Cook. Cook became CEO at the tail end of fiscal 2011, and Apple has been scooping up companies hand over fist ever since.

Source: SEC filings and conference calls. Fiscal years shown.

Beyond Beats, here are Apples other smaller acquisitions that have made headlines this year.

Month	Name	Specialty
January	SnappyLabs	Rapid-fire camera app
February	Burstly	App testing and ad monetization
May	LuxVue	Low-power micro-LED displays
June	Spotsetter	Location-based social search engine
June	Swell	Podcast discovery
June	Booklamp	Book discovery
September	Prss	Digital magazine publishing
November	Union Bay Networks	Cloud networking and software-defined data centers

Source: Various media reports.

This is far from a comprehensive list. Cook confirmed that Apple bought seven companies during the September quarter alone, and news only broke about one of them. Naturally, as the sheer number of acquisitions rises, so too do Apples cash outlays.

Source: SEC filings. Fiscal years shown.

Beats comprises the bulk of fiscal 2014s acquisition spending, skewing the average paid per acquisition. Backing out Beats, Apple paid only $60 million on average per acquisition in 2014.

Source: SEC filings. Fiscal years shown.

At a time when tech heavyweights seem to be paying massive premiums for acquisitions, Apple is still playing fairly conservative in terms of price.

All about that race
Apple is now the proud owner of a wide range of innovative technologies that were in their early stages, technologies that it can integrate into future products. But this isnt just a technological race; its also a dash to snap up the best talent before the competition does so. Apple is in the midst of an acqui-hiring spree.

Consider the January acquisition of SnappyLabs, a single developer that had developed a breakthrough JPEG-compression engine that was tailored for ARM processors like Apples A-chips. Thanks to the faster compression, SnappyLabs app allowed the iPhone 5 to capture photos at 20 frames per second, much faster than the Galaxy S4s 7.5 frames per second (both were 2012 flagships). Apple puts a lot of emphasis on the iPhones photographical prowess, adding new photo and video modes each year, so this purchase makes perfect sense.

But most importantly, were not even close to the finish line of this race.

The next big thing is almost here
So with all of this in mind, what can investors expect of Apples acquisition strategy in the years ahead under Tim Cook? The CEO has said that Apple will not let price preclude it from acquiring a company that is a good strategic fit in the long-term. That said its unlikely that Cook intends to start buying up large companies with regularity.

Investors have seen a breathtaking increase in the rate at which Apple acquires smaller companies. This is as much offense as it is defense. Rivals have no problem buying companies that have long-term potential, and if Apple doesnt start playing ball then it could potentially lose out on the next big thing.

In the years to come, investors should expect Apple to continue its brisk pace of smaller acquisitions, interspersed with the occasional jaw-dropper.

Get FREE Issues of The Motley Fool Collective

Get straightforward advice on whats really happening with the stock markets, direct to your inbox. Help yourself with our FREE email newsletter designed to help you protect and grow your portfolio wealth.

By providing your email address, you consent to receiving further information on our goods and services and those of our business partners. To opt-out of receiving this information click here. All information provided is governed by our Privacy Statement.