Consolidation has become the norm in the technology industry, and has hit the East Bay especially hard. Since the beginning of 2004, over 25% of the East Bay’s top technology related firms have been, or are in the process of being acquired.   

In the new book Hunter or Hunted: Technology, Innovation, and Competitive Strategy, technology educator, author and executive Dave Rochlin uses a combination of academic research, industry tools, and historical market behavior to explain the strategies driving the current technology industry business environment. These can be readily applied to our current cycle in the Bay Area.  

Says Rochlin.  “Most of the recent East Bay acquisition targets, such as PeopleSoft, Ask Jeeves, E-Loan, and QRS are in maturing technology sectors, where size matters.  As the emphasis has moved to sales channels, operational efficiency, and platform reach, each had more value as part of a larger whole”  (see attached chart.)  Rochlin points out that there are very few public technology firms in the East Bay that have enough scale to be consolidators, and this pattern of acquisition may simply be a way of life.

Rochlin’s book is designed to be a practical strategic guide to understanding how firms can develop robust ecosystems and competitive barriers, and use timing to their advantage. The book points out that current consolidation trends are mirrored in a number of historical industries including railroads, utilities, and automobile manufacturing.

Rochlin’s approach was to combine recent research in network-based competitive advantage, dominant design, diffusion, and disruption with the more classical works of economics and management theory. He also highlights historical patterns in investment bubbles, diffusion and disruptive technology, explaining how they indicate strong behavioral, sociological, and political underpinnings that need to be considered as part of the overall explanation of technology and firm selection. 

And what about the future for the East Bay?  “The more dynamic technology sectors are currently networking, video distribution, and especially voice over IP.” Rochlin points out that quite a few firms are re-tooling to support voice over IP. “But, lifecycle theory predicts that while it is currently undergoing a mini-bubble, it will eventually start to consolidate, leading to another wave of mergers.”

Supporting Data

This study looked at two lists, the San Francisco Chronicle’s Top 200 List for 2004 and the Contra Costa Times’ 50 largest public companies list for 2004.  Both lists ranked companies based on 2003 sales revenue. 60% of top East Bay firms were classified as technology related, and 8 out of 30 (26%) have been acquired or are in the process of being acquired.  For the larger Bay Area 19 out of the largest 135 publicly traded firms of 2004 (14%) in the technology industry have been acquired since 2004.

About the Book

“Hunter or Hunted: Technology, Innovation, and Competitive Strategy”, by Dave Rochlin, is available in bookstores nationwide and via most major online booksellers. The book is an extension of the author’s popular executive MBA graduate business course on technology strategy at St. Mary’s College. It is intended for technologists, executives, and others who seek to reduce the ambiguity inherent in most technology-related strategic decision-making. The book is published by Texere, part of Thomson Professional Business, a global leader in providing integrated information solutions to business and professional customers. ISBN 0-324-26128-4. The book's website is http://www.hunterorhunted.com.

About the Author

Dave Rochlin is a long-time technology executive and consultant, with a background in product innovation, information services, networking, consumer technology, and enterprise software across a number of firms and industries. He has degrees form the Haas School at UC Berkeley, and The Kellogg School at Northwestern University, where he graduated Beta Gamma Sigma. Dave developed and teaches the e-business and technology strategy course for the executive MBA program in the St. Mary’s College of California Graduate School of Business, where he has been a part-time faculty member since 2001. He has also developed and conducted advanced e-business and e-commerce certification courses in the United States, Europe and the Middle East, and has been quoted on or written about technology related issues for a number of industry leading publications. 

About The Thomson Corporation

The Thomson Corporation (www.thomson.com), with 2004 revenues from continuing operations of $8.10 billion, is a global leader in providing integrated information solutions to business and professional customers. With operational headquarters in Stamford, Conn., Thomson (NYSE: TOC; TSX: TOC) has approximately 38,000 employees and provides services in approximately 130 countries. Its learning businesses and brands serve the needs of individuals, learning institutions, corporations and government agencies with products and services for both traditional and distributed learning.

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EAST BAY TECHNOLOGY ACQUISITIONS: WHERE THEY ARE NOW AND WHY