IoT M&A Activity Continues – Verizon buys AOL for $4.4 Billion

Yesterday it was reported that Verizon is buying AOL for about $4.4 billion. AOL will become a separate division within Verizon, and current AOL CEO Tim Armstrong will reportedly remain in that position with the company. (Source: “Verizon buys AOL for $4.4 billion,” CNN Money, Tuesday May 12, 2015).

While many people still think of AOL as the dial-up, CD-ROM-mailing Internet company of the 1990s, in truth the company has become much more than that. AOL, it turns out, “provides online video services, content and ads to 40,000 [ ] publishers. It brings in $600 million in advertising, [and] has news sites such as The Huffington Post, TechCrunch and Engadget.” The mass media company may, therefore, prove to be an important and valuable part of Verizon’s Internet of Things strategy.

Verizon AOL IOT
“Verizon touted its Internet of Things ambitions prominently in the press release, right there in the second paragraph.”

In her article, “What the Verizon-AOL deal means for the Internet of Things,” Samantha Murphy Kelly (Deputy Tech Editor for Mashable) suggests that the AOL acquisition may not only help Verizon to push content to customers over IoT connected devices, but also harvest information from customers to be used  in tailoring advertisements pushed back to them:

“Verizon joins a long list of tech giants such as Samsung, Facebook and Apple that have expressed a growing interest in the Internet of Things…With a strong emphasis on growing its mobile TV and advertising networks, could Verizon users one day be reading headlines from AOL-owned content publications such as The Huffington Post and Engadget directly from a refrigerator’s display? Will Verizon monitor how we live our lives at home (what temperature we like, what time we go to bed) and pump that data into its newly acquired AOL advertising technology engine?

“…Aapo Markkanen, principle analyst at ABI Research, believes users could see personalized grocery advertisements (based on what your fridge senses you are running low on) while reading Huffington Post stories on a smartphone or tablet device, rather than seeing content streamed across a fridge’s display.

In theory, the products in the home could learn your habits from walking room to room, determine when you make coffee and note your favorite blend. We could see this trickle beyond smart home and into the connected car, too — all data that would be enormously valuable to advertisers.”

Verizon buys AOL
AOL CEO Tim Armstrong “recently told a panel at the Internet and Television Expo that Internet companies and traditional cable, phone and media companies need to be coming together to create joint offerings, and that those who don’t find a partner are in danger of being left on the sidelines without enough scale to compete.”

Verizon’s press release concerning the acquisition confirmed that the purchase is seen by the company as an IoT play: “The agreement will also support and connect to Verizon’s IoT (Internet of Things) platforms, creating a growth platform from wireless to IoT for consumers and businesses.” (Source: PR Newswire, “Verizon to Acquire AOL,” May 12, 2015).

This will not, of course, be the last major merger or acquisition we see as companies jockey for position in the Internet of Things sweepstakes now developing in the marketplace. It is, however, emblematic of the significant changes now occurring as companies work to position themselves to better compete in the coming age of IoT.

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