Google and Yahoo buy startups wholesale and retail

    There were times when firms invested millions of dollars in their own R&D divisions. Now it’s much easier to buy ready-made technology with its creators. Some corporations have been doing this constantly for many years. Recently, Google and Yahoo have joined them, writes Wired .

    Indeed, why strain? Own research work requires a huge amount of time and effort. Moreover, these developments may not lead to anything. Therefore, large corporations are increasingly choosing the simpler way: they buy ready-made. Some firms really specialize in buying up startups.

    For example, Cisco, the world leader in the telecommunications market, has already bought 107 companies over the past 12 years. And the market shows that this way is quite acceptable. The company is still among the leaders, and its development can be described as successful, so Cisco continues to act in the same style.

    Purchases from other startups allow the company to expand its presence in new markets. For example, in order to enter the digital home equipment market, Cisco bought Scientific-Atlanta cable box manufacturer last year for $ 6.9 billion, twice the annual R&D budget.

    Other corporations also carefully analyze the market to choose a target for the purchase. Last year, News Corp. entered the social media market by purchasing for $ 580 million. The corporation liked the Internet so much that it continued shopping: in May 2006, they purchased the online karaoke player and the Newroo news aggregator. Other high-profile deals are also known to everyone: eBay Corporation has laid out $ 2.6 billion for Skype VoIP service.

    Most clearly, the trend of "buying instead of development" manifests itself in Internet search technologies. The fact is that thanks to the boom in search advertising, the Internet giants Google and Yahoo have got a huge amount of money at their disposal and are not shy about spending big.

    Over the past year and a half, Google has acquired startups Dodgeball, Urchin Software and Upstartle, thus expanding its presence in the markets of mobile social networks, web analytics tools and office web tools. Yahoo, in turn, bought startups Konfabulator, Webjay,, Flickr and Thanks to this, Yahoo was able to offer new services on its portal: original graphic widgets, online playlists, an event tracking service, as well as photo and bookmark sharing services. However, neither Google nor Yahoo will be able to compare the number of purchases with its wealthy competitor Microsoft, which over the past year has bought as many as 24 companies, including the online bookmarking service Onfolio.

    Such behavior of “financial bags” cannot go unnoticed by small companies. Some of them initially build their business with a view to its future sale. Previously, a startup’s dream was an IPO and listing, but after the bubble of dotcoms and the Enron scam, the rules for working corporations on the exchange were tightened, so now not every company can decide on an IPO. There is only one way out - to sell to one of the giants.

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