Amid fierce smartphone competition between Samsung and Apple that has spilled into a multinational patent battle, it looks like Apple may have opened yet another front on the M&A side: it is buying mobile security company AuthenTec — which had only just signed a deal with Samsung for Android devices — for $356 million.
AuthenTec, among other things, makes fingerprint sensor chips that are used for security and identification purposes; these are embedded in computing devices. The news was first reported by Reuters; the full announcement was filed with the SEC.
Just earlier this month AuthenTec had inked a deal with Samsung to cover security and device management services to cater to the “BYOD” trend — that is, workers taking their own handsets into their enterprise environment. The AuthenTec service would let IT managers quickly secure and authenticate those devices.
Reuters reported the deal as $356 million — $8 per share of the company. But that’s actually a pretty cheap price, considering that before the company went public it had raised some $600 million (yes, million) in funding.
If we had been listening between the lines (so to speak), we may have even heard a clue to this deal earlier this week, when Apple reported its Q2 results.
In those results, CEO Tim Cook made several references to how well Apple was doing in the enterprise segment, citing “rapid adoption” of the iPad in particular, with the number of iPad tablets more than tripling among Fortune 500 companies. “The iPad has become an indispensable tool worldwide to help employees across the industries do their jobs more effectively.”
Cook also said that the iPhone was becoming “the standard device for the employees,” with the number of iPhones sold into Fortune 500 companies more than doubling in the past year.
We have heard some of that anecdotally ourselves. Aaron Levie, the CEO of Box, told me this week that among the enterprise customers of Box’s 6-7 out of every 10 work in primarily iOS environments.
It’s not clear whether this deal will mean a continuation of existing deals, such as the agreement with Samsung (others include HBO for the HBO GO app, and HP), or whether Apple will use this as a way of cutting off the use of the technology by its competitors.
The 8-K has some details on Apple and AuthenTec’s intellectual property, and well as future R&D. It says that Apple is paying $20 million in an IP and tech agreement to “acquire non-exclusive licenses and certain other rights with respect to hardware technology, software technology and patents of the Company.” But there is also a clause for licensing IP on a “non-exclusive basis” for $115 million.
As for development, the 8-K notes that Apple will pay an additional $7.5 million for product development work. Any new IP that comes out of that becomes the property of Apple.
We will have to wait and see exactly what Apple intends to do with this purchase, but it’s likely to mean a stronger set of enterprise-friendly features, and possibly some security and authentication services that can be used for the whole of the iPhone user base.
Security has become a very strong focus with smartphones: the more wireless we become the more of our lives we put into the cloud, with those devices becoming a key way of accessing it. With the introduction of mobile wallet services — something likely to be on Apple’s radar — the importance of securing our devices will become even greater.
Full SEC announcement embedded below