A lesser-known but significant player in the Silicon Valley tech world is getting acquired today — a move that underscores the changing economics in the world of hardware. Surfaceink, a company that got its start as Apple’s key hardware engineering partner after the return of Steve Jobs as CEO, is being acquired by PwC, the professional services firm that provides accounting, management consultancy, IT and more to its enterprise customers.
Financial terms of the deal are not being disclosed. Surfaceink — which today not only prototypes and designs hardware that ranges from consumer devices through to physical objects used in enterprise environments, but also operates labs to test for acoustics, electronics and more — has never raised any outside funding.
The company has around 50 employees in the Bay Area and all of them will be joining PwC as part of the deal. That includes Eric Bauswell, the CEO who founded the company.
Surfaceink will also be bringing on work it has in progress with existing customers while also working with PwC on winning new business.
Bauswell, in an interview, declined to say how many customers the company has, who they are and what they are working on. However, the names of customers past and present, listed on its site, is a veritable who’s-who of the technology industry: They include Amazon, Apple, Atari, Dell, Facebook, Google, HP, Intel, Microsoft, PayPal, Qualcomm and more.
PwC is not exactly known for being a player in the hardware space. But it has a number of major technology companies as clients already, and importantly, a number of other companies that are either interested in building hardware products to extend their engagement with customers, or on a more basic, strategic level, interested in exploring what they might do with hardware — theirs or that of third-party partners — now and in the future to grow their business.
With Sufaceink, PwC gains both in-house expertise to better understand that component of their customers’ businesses, and also opens the door to potentially get involved in working on that for them. The trend to widen engagement was also something driving Surfaceink to explore what its next steps would be. Bauswell said those explorations included potentially taking on outside investment to build out in-house consulting but remain independent.
“It was on the heels of a strategic refresh within PwC,” said Jenny Koehler, PwC’s business development head who works on strategic growth and helped seek out Surfaceink. “We’re always scanning the market for interesting companies, whether it’s partnership or acquisition, and Surfaceink was one of them. It happened to be at the same time that they were exploring [alternatives] for their purposes to be able to deliver more broadly with their clients.” She said the pair started talking well over a year ago.
“There’s a long laundry list of reasons why different companies would want to work with us. And they all end up being very individualized,” added Bauswell. “In general, it’s that we’ve got a team that’s got a ton of experience in shipping product. When people want to ship a new product or go after a new business sector or create a new business unit, you know, a lot of times we will be the first boots on the ground. They’ll start to flesh out their team, and we support that, for them to be sustainable beyond our engagement. Dropping into a cohesive team to execute, with an experienced team that’s shipped a lot of products, it mitigates a lot of that risk.”
Now, as part of a big-five consulting firm, Surfaceink arguably looks like an even more de-risked partner to even larger clients, who may be coming from well outside of tech but need to explore ways of leveraging it better in the future.
For its part, Surfaceink has had a very interesting and pivotal role in the development of the technology industry. It was founded in 1999, specifically to be a partner to Apple, which had ambitious and long-term plans in place with the reinstatement of Steve Jobs as CEO in 1997.
The pair worked together on, essentially, every piece of hardware that Apple was making at the time, including the iMac, PowerBook, iPod, iPhone, iPad and MacBook. That relationship, interestingly, took a bad turn in 2010, when Surfaceink showed off its own tablet designs as part of its effort to bring on new customers.
Apple soon after dropped the company. Bauswell, speaking to The New York Times at the time, said it was due to “Apple’s growing awareness of our turnkey capabilities… I think they view our capabilities as an opportunity for competitors,” he said.
Of course, Apple had taken off into the stratosphere as a business by this point, and so there would have been an argument for the enlarged company to bring more hardware engineering in house regardless.
That’s a route Apple has taken with other aspects of its product design, from chipmaking to map and streaming services development. It seemed, too, that Apple also poached people after the separation. Even today, there are at least 15 people at Apple working in hardware engineering who had previously worked at Surfaceink, according to a scan of LinkedIn.