One blogger, who I will not be naming because his post is wrong in so many ways, has put together a list of companies that he thinks Amazon might buy next. He’s also assembled a chart showing most of the companies Amazon has bought in the past 15 years (it’s missing a few non-obvious acquisitions like Abebooks’ share in LibraryThing and Bookfinder.com).
The chart may be incomplete but it’s still useful; unfortunately I cannot say the same about that blogger’s list of future acquisitions.
Most of that list consists of companies that cannot be bought, companies that Amazon already owns, and companies that I would not touch with a 10 foot pole. In fact that list is so bad I thought it worth a dissection just to show just how bad it is.
But before I critique that list, let me share what few details I have gleaned about Amazon’s acquisition strategies. I have been watching Amazon for a while now, and so far as I can tell Amazon has been buying companies for one of two reasons.
Amazon buys tech companies (Ivona, Kiva Systems, Mobipocket) that Amazon thinks would be useful (product, tech, or skills) for some project Amazon is working on internally. It is sometimes unclear exactly how Amazon plans to use the startup, but I think Amazon always has some use in mind.
Amazon also buys retailers like AbeBooks, The Book Depository, Woot, Zappos, etc, that are successful in their niche. It’s my guess that Amazon buys these retailers to keep them from becoming a serious threat to Amazon (and also to keep new potential competitors from launching).
With that in mind, let’s consider the companies that blogger suggested Amazon might buy.
His list includes retailers Best Buy and Radio Shack, neither of which are IMO a good buy. I’m not sure they are healthy; they’re not dying off but they’re also not doing too well, either. The net gain from the possible synergies of the purchase don’t necessarily outweigh all the baggage.
That blogger also suggested that Amazon should by Songza, a startup that lets you assemble playlists. This is a great idea, which is why Amazon bought Songza in 2010 (as part of another acquisition).
Update: It turns out that Amazon is only a partial owner of Songza. This startup relaunched and now has a number of outside investors.
Netflix is also mentioned as a potential acquisition, but that purchase could never happen. Even if Amazon could work out a deal I seriously doubt that they would be able to get regulatory approval to buy a competitor.
The online grocery delivery service Peapod is another deal that I do not see happening. That startup is owned by the retail chain conglomerate Royal Ahold and is integrated into that conglomerate’s supermarket chains (a complementary relationship). A hundred bucks says it is not for sale.
The list also includes 3 potential acquisitions that aren’t completely ridiculous: Lions Gate, Staples, and Pinterest. If Amazon wanted to buy a movie studio, Lions Gate might be a good buy; it’s the largest independent studio left standing. And Staples is a healthy retailer that has a solid chunk of the business retail market. But Pinterest, even though it could be a good complement for Amazon, is probably too expensive to buy at the moment. The hype has driven the purchase price too high for it to be worth buying.
All in all, the postwas a complete waste of a couple hours of my morning. I wouldn’t pay it too much attention.