This really ought to be updated for the second half of 07, as the acquisitions pace accelerates. In my recent talks and interviews about Web 2.0 in Germany, China, and Japan, I found myself cautioning entrepreneurs that Web 2.0 is already in the consolidation phase, where few companies are really even imagining going all the way to becoming a freestanding company, but instead looking for acquisition as their final exit. (That’s why Facebook’s refusal to accept acquisition was so noteworthy and so refreshing.)
It would also be really nice to do something like this, but more complete, with acquisitions by category, regardless of acquiror, ranking by size of acquisition, and taking a somewhat longer time frame. For example, consider mapping — one of the areas we identified early on as one of the key components of the emerging internet operating system, devoting an entire conference (Where 2.0) to it — we’ve seen the acquisition of Keyhole, AtLast and Sketchup by Google, Vexcel and GeoTango by Microsoft, WhereOnEarth by Yahoo, but also (and much larger) acquisitions of Navteq by Nokia, and Teleatlas by either TomTom or Garmin.
It’s important to recognize that the industry goes in cycles. We have some new set of breakthroughs, insights that lead to an opening of possibilities in the market. As companies emerge from the first wave, they gradually take the light from new startups growing in their shadow. First comes an acquisition phase, but that is ultimately followed simply by failure to thrive in the shadows of the giants. The industry begins to stagnate, until it all begins again with new innovations in some area that is further afield. We obviously saw this with the IBM PC. The early 80s were a hotbed of innovation in personal computing, but by the early 90s, Microsoft was telling venture capitalists where it was safe to invest.
I think we have a few years left to run in the current cycle, but it’s worth noting that the landscape is changing, and following the historical pattern of expansion followed by consolidation.