Worst tech mergers and acquisitions: Cisco and Linksys; Apple and Lala.com

A corporate merger, like a marriage, can yield a whole stronger than its parts -- or it can end in utter disaster. We countdown the worst corporate romances in IT history.

zombie-bride-and-groom.gif

Corporate mergers - like marriages - can result in the whole being stronger than its parts -- or they can end in utter disaster. The IT industry has suffered its share of disastrous marriages. We're counting down the worst of the worst...

#17 - Cisco & Linksys

Cisco entered the highly competitive small office and home office market back in 2003, by purchasing LINKSYS for $500M.

Linksys, once the dominant player in the space has since been joined by NETGEAR, D-LINK, ASUS and numerous other vendors making nearly identical products, not to mention that many service providers and telcos have also issued their own integrated OEM Wi-Fi routers/residential gateways included as part of basic service offerings.

Linksys as a result fell on hard times -- first being somewhat neglected by its parent company Cisco in the last several years, releasing extremely commoditized and less-reliable products.

Various experimentation with "router design of the month" and heavy product overlap had produced a lousy generation of home routers by 2010, which required a complete re-design in 2011. Arguably this did improve the quality of LINKSYS's products. But it was too late.

While LINKSYS did eventually eventually solve its engineering issues, Cisco could not make the consumer products division profitable when compared to its enterprise networking equipment division.

LINKSYS is now owned by Belkin, and has since been producing very good quality SOHO routers again, such as those which embrace the current 802.11ac "Wave 2" standard.

#16 - Apple & Lala

15-mergers-apple-lala.gif

Lala was being so innovative that it scared the hell out of Apple.

With most of the company mergers listed in this piece, although many of them turned out horribly, you can at least say that the intentions of the company doing the acquisition had the objective of actually integrating the assets of the company being acquired and making money with it.

I mean, this is usually why you acquire another company, right?

Apple bought music streaming service Lala.com back in December of 2009 for about $80M. If you recall, Lala was doing some innovative things around pricing and service offerings in the music streaming business, and our own Ed Bott picked it as his favorite among iTunes alternatives in his article written in April of 2009.

Well, Lala was being so innovative that it scared the hell out of Apple, so the company simply killed it.

No further development, no integration into iTunes, nada.

While the financial impact of Lala's death is far smaller than any of the mergers and acquisitions listed in this rogue's gallery, it is by far the worst and most malicious case of corporate merger infanticide I have ever seen to date.

Apple would later purchase Beats Audio for $3B, and would integrate its streaming music service into Apple Music, which is now part of iTunes. Only the future will tell if that acquisition will be less of a case of pure infanticide than that of Lala's.

Next up, even worse: #15, #14 and #13

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All