Big splashy buyouts are not Apple’s thing. The technology giant prefers more subdued tech acquisitions and a lot of the times it prefers to develop its technology in-house. However, there is one big hole in its business model which is how to convert its 400 million and growing iTunes store users into a massive shopping base. Successfully converting even a fraction of this large base of loyal customers would add a tremendous amount of revenue to Apple’s bottom line. You have to remember that Apple is in a race with Microsoft. It is already beating Microsoft. In fact, just the sales of the iPhone beat all of Microsoft’s revenue. That is huge and Apple wants to maintain that lead. It already has very strong revenue streams from the iPod, the iPhone and the iPad. Creating another heavy-revenue stream in terms of e-commerce would bode well for Apple’s stock and long-term business dominance. As we have written earlier, there is at least one analysis which believes that Apple’s stock will past $1,000 a share. If Apple is able to successfully convert its brand dominance into an e-commerce juggernaut, $1,000 per share might be a bargain for Apple computers.
Along these lines, it makes sense for the recent reports that Apple is reportedly in talks to acquire The Fancy. The Fancy is a social commerce site that operates like Pinterest, the highly popular pin board website, but with a twist. The Fancy actually monetizes the lists of its members so that when people buy through the lists that they have made, The Fancy takes a cut of the sales that the users make and to incentivize users to share their lists, users also get a commission every time somebody buys from their lists. It all adds up to a really great revenue model because unlike Pinterest which is apparently focused on just growing its user base, The Fancy is more focused on not only growing its user base but also making money off this growth. It is a relatively comprehensive focus on e-commerce that other rivals like Pinterest and similar services do not have. This e-commerce’s focus apparently caught the eye of Apple CEO Tim Cook. Both Cook and the CEO of The Fancy Joe Einhorn met at the Sun Valley Conference of Allen & Company in the early part of 2012. Looking back at their meeting, what raises eyebrows was that previously Tim Cook is notorious for being absent in social networking sites. After the meeting with Einhorn, Tim Cook opened an account at The Fancy and started using the site. If that is not a vote of confidence, we do not know what is. The last round of funding that The Fancy received valued the company at $100 million.
It remains to be seen if Apple would pay that much or more. As we have mentioned earlier, Apple is not really given to big and splashy acquisitions unlike Microsoft which paid billions for Skype and Facebook which plunked down $1 billion for Instagram. Still, the synergies between the two companies’ fast-growing e-commerce platform that engages social media users while at the same time providing a lucrative revenue stream might be a deal that is too attractive for Apple to pass up. Apple has the heft and the international brand that this may make a lot of sense for both The Fancy and Apple. Apple gets a revenue base and The Fancy’s founders and employees get to become part of the team of a global brand. It is definitely going to be interesting to see how these reported talks pan out.