M&As in 2007: Redrawing the Battle Lines

Looking back over the course of 2007, it’s clear the technology industry’s landscape has shifted since the year began. Not only have market forces lifted some companies up while pushing others down, but a series of mergers and acquisitions have reshaped competitors’ territories.

“We’ve certainly seen a lot of M&A activity this year, as well as the continuing digestion of mergers and acquisitions from previous years,” Rebecca Wettemann, vice president of research for Nucleus Research, told the E-Commerce Times.

Which of these events has the biggest overall impact on the industry may depend on the viewer’s perspective — not to mention on whether ground-shakers such as Google’s proposed acquisition of DoubleClick ultimately get approved. There’s no denying, however, that some markets will look very different entering the upcoming year.

Business Intelligence

One of the more notable M&A trends in 2007 saw large-scale enterprise vendors Oracle, SAP and IBM all buying up best-of-breed business intelligence players, Wettemann noted.

First, in March, Oracle acquired Hyperion, despite the fact that “it already had a pretty strong business intelligence offering,” she said. Next, SAP took in Business Objects in October, followed in short order by IBM’s announced acquisition of Cognos last month.

“It was a good move for Oracle, certainly, but for SAP it’s more difficult to tell,” Wettemann explained. “They don’t have a lot of history integrating applications.

“For IBM, I’m also not sure,” Wettemann added. “They don’t have a great track record on integrating business acquisitions, and the real challenge will be explaining to customers how they’re getting more by purchasing these products from IBM.”

The E-Commerce Terrain

For the big Internet companies, meanwhile, the focus in 2007 has been on consolidating assets and buying supporting technologies, Greg Sterling, founder and principal with Sterling Market Intelligence, told the E-Commerce Times.

In addition to the Google-DoubleClick deal, other examples are Yahoo’s acquisition of both Blue Lithium and Right Media; AOL’s purchase of Third Screen Media, Tacoda, Adtech and Quigo; and Microsoft’s acquisition of aQuantive, TellMe and AdECN, Sterling noted.

“It was really about all these companies trying to put together the largest reach and have a full range of capabilities to offer to advertisers,” Sterling explained. “Microsoft’s TellMe acquisition, while smaller, is a particularly meaningful one for Microsoft because it’s about delivering voice-enabled services, especially for mobile.”

The DoubleClick Deal

Among acquisitions by Internet companies, Google’s proposed purchase of DoubleClick has certainly attracted the most attention — and consternation.

“The concern is that Google will become the dominant force in online advertising,” Sterling said. “Of course, what it will do for Google is give it a much higher profile in brand advertising online and reinforce its leadership position.”

Indeed, by acquiring different pieces of its economic model, Google is “basically becoming an uber-agency — the place you go for all ad revenue,” Rob Enderle, president and principal analyst with the Enderle Group, told the E-Commerce Times. “This puts them in a hugely powerful position in terms of controlling and capturing the money that goes toward Internet advertising. It’s incredibly strategic, but it has also scared many regulators.”

Still awaiting approval while various parties scrutinize the deal, “the attempted DoubleClick merger woke a lot of people up to how huge Google is becoming,” Enderle added.

Microsoft’s Moves

Microsoft is certainly well aware of Google’s growing power. The company’s aQuantive purchase “was really a response to Google’s DoubleClick plans — it was more of a block,” Enderle said. “aQuantive was No. 2 after DoubleClick, so that took care of the big ones in that space. It also drew the battle lines between Microsoft and Google.”

Microsoft’s investment in Facebook was a similar block, Enderle noted. “A lot of the things Microsoft has done of late have been to prevent Google from getting too much power.”

Meanwhile, Microsoft has also embarked on a move into the medical market, including its acquisition of Medstory this year, Enderle added.

Cisco and WebEx

Cisco’s acquisition of WebEx was another significant one that happened this year. Prior to the acquisition “WebEx was languishing, underfunded and under-resourced,” Enderle noted. Microsoft, the company’s principal competitor, “was wiping the floor with them.”

It’s not clear how much the acquisition by Cisco has helped so far, he added.

“It’s certainly more visible, but not anywhere near the power it once was,” he said.

“It’s going to be a tough one,” agreed Wettemann. “It’s a different business model, and as more applications like Google Presentations become available, WebEx will have to work harder to justify its prices.”

Wait and See

Acer’s acquisition of Gateway was another notable one of 2007, but the deal just closed in October. “It could go both ways, but we won’t really see the impact until next year,” Enderle said.

The proposed merger of Sirius and XM, meanwhile, while significant, is still awaiting regulatory approval. “These companies have a real problem as HD radio emerges,” Enderle noted. “Their little area will become much more competitive, so there’s probably no way they can do it separately — they’ll have to pull together.”

EMC’s purchase of Berkeley Data Systems, provider of online storage service Mozy, “could turn out to be one of the bigger ones in this space,” Enderle asserted.

Given rumors that Google may be planning a similar foray into online storage, “EMC and Google may be butting heads over this opportunity,” he said.

Looking forward, “we will continue to see Google look for opportunities to acquire technologies to bring it more firmly into the enterprise space,” Wettemann predicted. “There’s a big opportunity for consolidation in the on-demand e-commerce space — it will be interesting to see how that plays out.”

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CRM Buyer Channels

CloudShare, HubSpot Integration Offers Clearer Vision of Product Engagement

Marketers and retailers can now more easily monitor customer engagement directly from HubSpot’s CRM business platform.

Software-as-a-service firm CloudShare on Tuesday announced the integration of its product experience platform with HubSpot. This integration lets business-to-business software marketers access data on product competency and engagement of their customers.

B2B software marketers need visibility into how customers and prospects interact with their products so they can improve product experiences. The integration enhances the streamlining of operations, improves marketing opportunities, and reduces the risk of customer churn.

For example, by monitoring the extent to which a prospect is engaged during a product proof of concept or product training, marketers can proactively address concerns and respond to opportunities.

“Everyone is talking about delivering the right content to prospects during the sales cycle, not just when they move from MQL to SQL. This integration is an opportunity to make that happen,” Jeremy Davis, product marketing manager at CloudShare, told CRM Buyer.

This integration benefits both CloudShare and HubSpot by freeing both products’ users from having to deal with siloed data, he explained.

The combination of platforms improves what other CRM systems provide by enabling marketing or sales ops teams to create automation and reporting to give everyone a clearer picture of the sales cycle and more insights into the prospect journey, Davis said.

POC Measurement

CloudShare also recently enhanced the analytics capabilities in its platform to expose in-class participation rates and drop-off rates of those who participated in proof of concept (POCs) — and for how long. This allows software organizations to measure POCs and customer training return on investment effectively.

The integration with HubSpot is the latest in a series of product releases from CloudShare aimed at improving product engagement and experience. Earlier this year, the company announced an integration with Salesforce, as well as in-app video conferencing and multi-instructor functionality.

CloudShare collects data on product participation during POCs and training sessions. Now accessible from HubSpot, CloudShare’s data allows marketers to monitor product engagement levels directly from their HubSpot platform.

This cross-departmental collaboration streamlines the management of a customer’s journey, from sales to onboarding and training.

Now CloudShare and HubSpot users will be able to complete their prospects’ journeys. Previously, marketers and sales teams were working through an inefficient workflow, with each working separately to close deals, according to Davis.

“With this integration, CloudShare and HubSpot users can build a seamless process to give prospects valuable touch points throughout the sales cycle, helping to close more deals, faster. The old bickering between marketing and sales around prospects can be put to rest,” he asserted.

Integration Strategy

CloudShare’s virtual experiences are replicated in the cloud and purpose-built to generate user engagement. The result impacts key business metrics such as repeat purchase rates, lower support costs, higher win rates, faster sales cycle, and more.

“CloudShare is dedicated to doing everything possible to help its customers reduce costs and save on resources, especially in times of recession,” said Muly Gotlieb, chief technology officer at CloudShare, in a company press release.

“Our integration with HubSpot is a part of this strategy: Enrich your CRM with crucial data on how engaged your prospects and customers are with your product, and you will more quickly be able to derive conclusions about your sales and training operations, allowing immediate corrective actions to optimize your POCs, close more deals, and make sure your customers are fully competent on your products to raise customer retention, which is more crucial today than ever before,” he enumerated further in the CloudShare news release. 

The platform partnership came as the result of CloudShare users seeing the impact that CloudShare POCs have had on their prospects. They were looking for ways to improve their sales cycles even further. They asked for native integration to improve their workflow, offered Davis.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open-source technologies. He is an esteemed reviewer of Linux distros and other open-source software. In addition, Jack extensively covers business technology and privacy issues, as well as developments in e-commerce and consumer electronics. Email Jack.

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Walmart Announces Merchandise Hub for Netflix

Walmart and Netflix are teaming up to sell merchandise pegged to the streaming media provider’s content.

“Through this new partnership, Walmart will not only offer products that bring the imagination of Netflix creators into reality, but Walmart customers and Netflix superfans will also find a new, exciting entertainment destination,” Walmart Executive Vice President Jeff Evans wrote in a news release Monday.

“The Netflix Hub brings together some of its most popular shows in its first digital storefront with a national retailer,” he added.

Merchandise will be tied to such shows as “Stranger Things,” “Nailed It!,” “CoComelon” and “Ada Twist, Scientist.”

Among the items offered when the Hub opens this fall are the Ada Twist Cuddle Plush ($10.97), “Squid Game” t-shirts, the “Stranger Things” Bluetooth cassette player ($64.88) and the Witcher Netflix Transformed Geralt Dark Horse Collectible Statue ($59.88).

Evans also noted the Hub will also offer a feature called Netflix Fan Select. It offers fans of Netflix shows an opportunity to vote for merchandise they’d like to see from the service’s stable of favorites.

Competing With Amazon

The new partnership will have benefits for both Walmart and Netflix.

Walmart wants to compete with Amazon, and part of that competition includes streaming services, maintained Ross Rubin, the principal analyst with Reticle Research, a consumer technology advisory firm in New York City.

“A partnership with Netflix could be used for further collaboration. Walmart might start offering select content from Netflix, for example,” he told the E-Commerce Times.

“There’s a lot of ways it could work without Walmart offering the full-blown Netflix service,” he added.

Zain Akbari, the equity analyst for Walmart at Morningstar, an investment research company in Chicago, noted that the partnership allows the retailer to capitalize on media-linked commerce without making the kind of investment Amazon made to do it.

Although Walmart sold its Vudu streaming service in 2020, its interest in interactive and shoppable media remains, he explained.

“From its standpoint a deal like this allows Walmart to focus on what it does best while leaving the content side of the equation to an established leading player,” Akbari told the E-Commerce Times. “Ultimately, it’s another avenue by which Walmart can expand its building e-commerce footprint.”

Good Business Move

“Allying itself with one of the two streaming market leaders — Netflix and YouTube both capture about six percent of total TV time — makes good business sense for Walmart,” added Charles King, the principal analyst at Pund-IT, a technology advisory firm in Hayward, Calif.

“The new storefront should please the company’s existing clients and attract new customers, and also provide a point of competitive differentiation from Amazon,” he told the E-Commerce Times.

Having exclusivity on products from Netflix’s hit shows is another benefit of its new partnership.

“Squid Game is a perfect example,” noted Michael Inouye, a principal analyst atABI Research.

“You can imagine what the opportunity would look like if this partnership was already in place and Walmart was the only place for official Squid Game Halloween costumes,” he told the E-Commerce Times.

He added that there is a lot of value but also a lot of cost in original programming, but to date, no one has done as well as Netflix with it.

“This allows Walmart to generate some of the same benefits to their core operations of an in-house streaming service without having to make those investments in original content,” he said.

Bricks and Mortar Prize

Netflix, too, benefits from the new arrangement.

“Walmart’s massive size and geographic reach make it a great partner for Netflix to reach shoppers,” King observed. “The new store should help drive sales during the upcoming holiday shopping season.”

“Netflix has tried for a while to monetize its content other ways. Selling merchandise is one of them,” added Morningstar Netflix equity analyst Neil Macker.

“Netflix is not an e-commerce company,” he continued. “It’s a streaming company. It has a different business model than a pure e-commerce company. By working with Walmart, they can get help with building a site, fulfillment, shipping and things like that.”

Netflix is also looking to diversify beyond subscriptions for its streaming service.

“It’s already announced its movement into games,” Rubin noted. “This is a way to take a page from Disney’s playbook.”

“Disney is very skilled at driving merchandise from characters in its franchises,” he continued. “Walmart offers a strong retail presence from which Netflix could potentially build that and realize more revenue from its original content and franchises.”

Netflix may also be looking beyond online involvement with Walmart.

“If Netflix could get into Walmart’s brick and mortar stores, that would be the bigger prize for Netflix,” he said. “To have a section of the stores promoting its properties would be a big win for Netflix.”

Crucial Channel

Inouye believes that in time, Walmart will become a crucial distribution channel for Netflix.

“Since many of Netflix’s shows are launched all at once — although there are a growing number that launch on a timed schedule — it can be extra challenging for Netflix to keep excitement up around a TV series when the next launch may be more than a year away,” he explained.

“Having merchandise and content to keep fans invested and engaged in this popular IP is massive for Netflix,” he said.

Creating original content can be a hit or miss proposition, he noted. Selling merchandise can help offset the cost of the misses.

Like Disney, Netflix would like to leverage its IP well beyond the video content itself, he maintained.

“Netflix is still in its early days here,” he said, “but it is starting to expand into new territories and opportunities and the Walmart deal could become a key piece to that strategy.”

“This is particularly critical in those markets, like North America, where future subscription growth is limited,” Inouye added.

“In these more mature markets revenue growth has to come from price increases or these alternate channels,” he continued. “The latter allows them to keep engagement higher, bring additional revenue, while ideally slowing the rate of subscription price hikes, which helps maintain — and slowly grow — the installed base.”

“Other content companies have looked to marketing and selling merchandise to bring additional revenue by capitalizing on hot IP — Rovio for example has done this with its “Angry Birds” IP — but with Netflix, this could be on another scale,” he concluded.

John P. Mello Jr. has been an ECT News Network reporter since 2003. His areas of focus include cybersecurity, IT issues, privacy, e-commerce, social media, artificial intelligence, big data and consumer electronics. He has written and edited for numerous publications, including the Boston Business Journal, the Boston Phoenix, Megapixel.Net and Government Security News. Email John.

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