Apple wants to buy game maker Electronic Arts (EA), according to Guy Adami, who cited unspecified "chatter" in a guest spot on CNBC's Fast Money, as relayed in a recap of Monday evening's show on TheStreet.com.
From the brief mention, speculation and debate have flourished on the Internet, as gaming fans and Apple fans hash out the pros and cons of such a merger. The reasoning is that Apple, flush with cash, is considering acquiring the Windows, Mac OS X, and gaming console game developer with a part of the mountains of cash the company has lying around (more than US$29 billion at last count).
This rumor comes to us at the same time we're told Apple is in the final stages of negotiating a buyout deal of Twitter, and at first blush, neither acquisition seems to make much sense. Why buy Twitter? It would be like buying AOL Instant Messenger -- no one makes any money from it, except for some of the Twitter app developers for iPhone.
Buying EA makes more sense to me, at least if Apple has finally realized that games can sell Macs -- I think they've certainly grokked that games help sell iPhones. By buying such a large, diversified company, Apple could make sure that all of the latest games are available for Mac, and that those Mac versions have the proper resources devoted to that development.
Say, wait a minute, what about that Teversham fellow? You know, the dapperly-named Xbox executive Apple raided from Big Redmond? Dude knows games, in theory, not that Xbox makes any money for Microsoft yet. Apple hired the guy to supposedly fill some educational role in Europe, but when you put him together with this EA rumor, it's easy to see how the two dovetail together.
If Apple is wanting to develop a game console (I'd bet it would be iPhone-OS based), or make either the Mac or iPhone or iPod supertouch a serious gaming platform, the company could use the expertise and talent controlled by EA.
Now toss in a little bit of this chip developer news that's been all the rage, especially the two former ATI guys snagged by Apple, and it's even easier to see that the company could be very, very serious about iPhone/iPod supertouch as a gaming platform.
In fact, I'm guessing that if there's any truth to this EA "chatter" (what a wankerish way to pussyfoot around with a rumor), it's all about the iPhone/iPod supertouch, and any Mac considerations are secondary.
Now, that said, there are some reasons that acquiring EA for the purposes of developing Mac or iPhone/iPod super touch games just doesn't make sense, and the number one such reason is that EA is a large company, and almost all of its talent and revenue are rooted in console gaming and Windows-gaming.
There's not a lot of Mac or iPhone experience over there, though there is a growing iPhone development presence. This has implications for leveraging the talent and skill sets, but it also has revenue implications. Unless Apple were to allow EA to continue to do business in the Windows and console markets, EA would very, very quickly go from a multi-billion dollar company to a multi-tens of million company in a flash.
In the past, Apple has turned its software purchases to Mac-only development efforts (Shake, Logic, Final Cut Pro). There's nothing saying Apple couldn't do differently with EA, but track records are track records.
Accordingly, despite the apparent enthusiasm I exhibited earlier in this column, I wouldn't get too excited about this chatter. It's not beyond the realm of possibility, but it's also not something I'll bank on.
I don't think Wall Street is giving it too much credence, either. EA's stock (ERTS) closed at $21.38 per share, a gain of $0.3427 (+1.63%), on moderately strong volume (11.7 million shares trading hands vs. an average volume of 9 million shares).
For those keeping score at home, ERTS has a market cap of $6.9 billion, chump change for Apple.