Apple is in the product business. But before they can manufacture a product, they need to design it.
There was a time when Apple Computer used to rely upon components supplied by outside companies to incorporate into their products. The Mac first used a microprocessor based on the Power Architecture developed by Motorola and IBM. Then in 2005, Apple announced the decision to switch from the Power Architecture to processors from Intel Corporation. Shortly after that, in 2006 they made the change.
At around the same time, they aquired a company called PA-Semi that had a microprocessor development team in silicon valley. That team had been working on a low power consumption microprocessor for the notebook PC market using the Power Architecture that Apple had just abandoned. They clearly didn’t need the product that PA-Semi had been building. They spent $75M to buy a company with 150 talented engineers who knew how to build low power chips. Now in the US, it’s against the law to buy people. You can only buy a company and hope that enough of the team decide to stay together at the new company. Apple bought the company in order to buy the team. In order to build the next generation of products, they needed a crack microprocessor development team. But for what?
Then two years later, Apple announced the iPhone, a product that would transform the company and propel it from just a desktop and laptop computer company to one that would blur the lines between a phone and a computer and a camera, forever changing the landscape of mobile computing in the industry.
When I was in the microprocessor development business, I had hired a design team in Austin Texas of about 75 people at a small company called Intrinsity. They had developed a method for building high performance low power circuits and were among one of the better processor development teams in the world. They were used to augment my own processor development team that had staff in San Diego, Austin, Silicon Valley and France. Then in 2010, Apple announced that they were going to acquire Intrinsity. Today, most of the guys who used to work for me are now at Apple. Their first project was a power reduction for the graphics subsystem in the iPad. Getting higher performance graphics on the iPad with a 10 hour battery life was one of the goals for the iPad and this team delivered on that promise. They’ve gone on to work on other elements of the processor for both the iPhone and the iPad.
Most recently, it was disclosed that Apple is in discussion with Intel to acquire their mobile handset modem chip business.
Here too, Apple might be buying a business where they have little interest in the actual products that company was making. They would be buying the business for the team. The acquisition has not been completed as of yet and will probably take a few months to complete.
There’s a pattern here. Before Apple can bring a new product to market, they need to have the right people on board. Not just any people, the right people, the best people.