10. IBM acquires PwC Consulting

In 2002, IBM acquired the consulting arm of Price-Waterhouse for US$3.5 billion. The move helped solidify IBM’s position in the consulting business and helped it move away from being a hardware and software manufacturer and more into the higher-margins consulting arena. The deal was very favorable to IBM in that it was able to acquire the company for less than 1 time revenue.

10.b PayPal acquired by Ebay

When Ebay acquired Paypal for US$1.5 billion, the move seemed to be a very risky one. Why would an auction house want to get an emerging payment system that really didn’t seem to fit much with its business model.

Ultimately, the deal has turned out to be quite a good bet as Paypal is now the engine of Ebay’s growth. In fact, most of the value of Ebay now resides in a payment system that has left many financial institution envious of its reach.

9. Lenovo acquires IBM’s computer division

In 2005, the company that had launched the personal computer revolution into the office changed hand as Lenovo, previously a local chinese computer manufacturer with no real global footprint, acquired IBM’s personal computer division for US$1.3 billion. The deal established Lenovo as a global player in the PC market and heralded the arrival of Chinese companies on the global scene.

8. Verizon acquires MCI

In the 1990s, MCI became one of the largest players in the telecommunication business, acquiring and rolling up small regional telephone companies and internet backbone operators. The problem, however, was that most of the growth it demonstrated on paper was based on fraudulent statements and accounting tricks that ended up with the company filing the largest bankruptcy on record at the time (this has since been superceded by other bankruptcies).  Verizon acquired the company in 2005 for $US 6.7 billion, picking up one of the largest internet backbone operator in the process.

The deal, which had come on the heel of SBC’s acquisition of AT&T, was the last one in the landline telecom consolidation that left most of the country’s telephone and internet infrastructure under the control of either AT&T or Verizon.

7. Microsoft / Yahoo partner on Search

Sometimes, the importance of a deal has move to do with the disruptive effect it has on the parties involved than the successful outcome it may represent. Such is the case of the Microsoft/Yahoo partnership which came after years of discussions between the two companies. From 2005 to 2007, Microsoft attempted to quietly acquire Yahoo but the reluctance of Yahoo’s leadership at the time left those calls unanswered. In February 2008, Microsoft decided to take the discussion to a whole new level by making an unsolicited takeover bid of $US44.6 billion in cash and stock in early 2008. The goal was to combine the two companies into a combined one that could compete with Google. Over the next quarter, the two company would battle publicly, with Microsoft eventually giving up on its attempt.

For the next year and a half, Yahoo went through major upheavals due to its refusal to take Microsoft’s offer and the negative impact it ended up having on its market capitalization. With a new CEO installed, Yahoo then went on to agree to outsource its search business to Microsoft, taking it away from the business that had initially served as the foundation of the company. While the link-up has not been completed as of this writing, the disruption that all those negotiations created for the two companies allowed their chief rival, Google, to consolidate its hold on the markets that were at stake. As of this writing, the market share of search held by a combined Yahoo/Microsoft partnership has dropped substantially from where it was when the Microsoft bid was initially made.

6. Weblogs Inc. acquired by AOL

Weblogs Inc. was founded by Jason Calacanis (and Brian Alvey) as a network of blogs, including the popular engadget, which was run by Pete Rojas (also the founder of Gizmodo). When AOL bought the company, in 2005, the price was rumored to be around US$25 to US$30 million. At the time, some felt AOL had overpaid. Today, some feel Weblogs Inc. sold for too cheap.

The reason I would consider this deal significant is that it was the first major deal involving blogs (some would argue that Google’s acquisition of blogger fit the bill but my counter to that was that blogger was a blog tool company while weblogs inc. was a blog content company). Because AOL, an arm of Time-Warner at the time, was a large corporate entity, this acquisition legitimized blogging within the corporate world and made it easier for any subsequent blog-related deal to happen.

In the next entry, we will look at the top 5 on the list. Some of them may surprise you.

Update: Part 2 is up.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title 10 Tech Deals that defined the decade — Part 1. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

First of all, by acquiring Linksys, Cisco gets a strong foothold in the small office/home office market as well as the hobbyist/consumer market. Why? Largely because this is where Linksys’ strength is. What Cisco gets out of this is a new source of revenues in a market it has had troubles getting into. The announcement that they will not change the name of the company and will let it run as an independent unit seems to point to that end.

Second, it provides Linksys with strong support in enterprise sales. Linksys has been getting into the enterprise largely through the back-door, with employees installing cheap wireless routers in offices. Now, with Cisco’s backing they can get into the enterprise as part of a more complete solution.

The next question is what this does to Cisco’s strategy as a telecom vendor. Linksys already sells voice over IP products. There may be some people at Cisco edging their bets in terms of the telecom bet. It could be that they figured that VoIP could also come in through a cable connection, which in itself would undermine sales of equipment to large phone companies and move more telephone traffic into the hands of cable companies. Alternately, Cisco could start selling solutions that would allow for a complete end to end solution for VoIP: Large offices would use Cisco’s existing solutions and smaller branch offices could take advantage of the Linksys offerings.

However, the real prize in this acquisition is in the wireless space. Linksys has already established itself as one of the strongest players in that market and Cisco will probably take advantage of those gains, eventually demising its own offerings in that market. The advantage for them is consolidation of product lines and an early toe in the 802.11g arena.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Cisco acquires Linksys. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

I generally disagree with Anil’s contention that it’s not a great fit. I believe there are many areas in which Google and Pyra are complementary.

My personal suspicion is that Google is looking at sites like Daypop, Popdex, and Blogdex and realizing that those sites, relying on the power of tens of thousands of editors, are working as well if not better than the news search engine Google has created. By buying Pyra Labs, Google can enhance its PageRank algorithms with some level of human interaction.

Going beyond the basic advantage in the search area, Google also is gaining a good tool to add to the Google Box and allow it entry in the overall corporate content management world. Why would anyone buy a box if it has search software only? How about if it has a full intranet solution on it?

While the acquisition does offer some level of centralization, I doubt it’s the only reason Google is doing it.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Google goes blogging. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

Sizing up the businesses

Ebay is primarily in the auction business. Everyday, millions of people buy and sell products through the service. Ebay does not hold any of the inventory and focuses primarily on providing a marketplace for exchange.

In parallel, Paypal provides a service that allows people to send money electronically by tying credit card numbers to email addresses. 60% of Paypal’s business comes from people who are using Ebay for auction and Ebay tried to compete with Paypal through its own service called Billpoint. The only problem was that Billpoint never received the kind of support Paypal enjoyed.

While other offerings (Yahoo PayDirect, Citibank’s C2It, Western Union’s MoneyZap) tried to go after the same market, Paypal established an early lead and hung on to it.

Furthermore, Paypal has worked hard to work with multiple credit card providers, and has established signification relationships with companies like UPS to create a system that allows for end to end processing of transaction.

Opportunities

At the same time, Ebay has been moving closer to a fixed price model since the acquisition of Half.com and has expanded into providing other services for sellers. Combining the services Ebay and Paypal have been offering will mean providing an end-to-end solution for anybody interested in selling goods online.

This puts Ebay on a collision course with Amazon.com, which is trying to attack the same problem from the large provider end.

What’s Next?

Once the merger has been completed, expect Ebay to integrate Paypal as part of its complete offering and get rid of Billpoint. Once that is done, Ebay will collect fees on listing goods, transacting the business, receiving the money, and delivering the goods. This is a great model as it puts Ebay clearly in the lead in terms of offering a complete solution for online retailers.

Once it’s managed to do so for small retailers (as it does on Half.com and Ebay “Buy it Now” sellers), expect Ebay to start going after larger and larger customers. In the long run, I would not be surprised to see Ebay and Amazon bid on some of the same contracts, with Amazon showcasing its warehousing capabilities as a plus, while Ebay would present its complete platform as the solution of choice (let’s not forget that Ebay now has a complete API already working, which makes it easier to integrate its services into other platforms.

Since both companies offer capabilities for online selling, I would expect them to fight it out on new features, with Amazon eventually suing Ebay over 1-click functionality and, after a settlement is reached, both companies looking at the possibility of a merger.

It looks like such a thing would make sense as both companies have managed to amass large quantities of customers and both are striking out in similar fields. Whereas Amazon focused on becoming a host to large companies like Target and Toys R Us, Ebay has focused on small retailers. Together, they could become the biggest host of online stores on the whole Internet.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Ebay to Acquire PayPal. You can follow him on twitter here or receive his weekly newsletter by subscribing here.

When I left Internet.com in 1996 and went to Earthweb, I was in charge of building Earthweb’s properties into something competitive with Internet.com. At the time, there were already a few players in the news market and I decided that Earthweb’s best positioning was to stay focused on the developer community instead of trying to do just Internet related stuff. Many people (including a lot of people on this list) have asked me what I thought of this announcement. So here it is.

Two roads converge

In a way, today’s announcement was one that didn’t surprise me much. Over the years, I’ve stayed in touch with people at both companies and, as time went on, I came to realize that both properties should be integrated. Before Earthweb’s IPO, such discussions were held both at Earthweb and at Internet.com and there seems to seem some differing views on the subject. However, I had always been nagged by the feeling that the two properties (the developer.com network and the internet.com network) would be a perfect fit.

With today’s announcement, I think that both companies benefit. For starters, Internet.com has clearly established itself as a leader in offering content to the internet community. With this acquisition, Internet.com solidifies its reach to the developer community. That’s a great thing for Internet.com and I think that those properties will fit very well within the network and that Internet.com will leverage its existing properties to maximize return on the assets they have acquired. As a result, I’d like to congratulate Alan Meckler and a very smart move.

On the Earthweb side, I am happy to hear that the company is focusing on a particular area in which it has established a strong leadership. The acquisition of Dice.com allowed Earthweb to get into the job placement market and establish one of the preeminent IT-related job boards on the market. This could position the company for a possible acquisition by a monster.com or hotjobs.com in that it is now more aligned with their business. If run successfully, the new Earthweb could be a very nice acquisition play.

Notable though, was that ITKnowledge, the fee-based service that Earthweb developed was not part of this acquisition. Jack Hidary has said that the company will be getting out of that business and I believe that he’s seeking a buyer for this service. The bottom line, though, is that Earthweb will manage to lower its costs as it will get rid of some of the overhead required to build new content. While it has built some strong properties, the company was too much of a niche player to successfully run the content unit to profitability. As a result, it’s a smart move on their part to get out of that business.

The most fascinating thing is that Earthweb is no longer the company that went public in that, apart from some of founders, nothing is left in terms of the model and assets the company went on.

All and all, this is a great win for Internet.com, as it secures its preeminent position in the content arena and allows it to expand into new markets. I am not, however, familiar enough with the job board business model to comment on Earthweb’s future potential but I am glad to see that the company’s management has made some very tough decisions and is working on focusing in a particular arena.

Tristan Louis is the founder and CEO of Keepskor and writes the influential tnl.net weblog, where this was initially posted under the title Internet.com Acquires Earthweb’s content. You can follow him on twitter here or receive his weekly newsletter by subscribing here.