Apple Adds Another Small Acquisition - A Strategy That Could Pay Off Down The Road

| About: Apple Inc. (AAPL)

September is looming, and although it is notoriously a bad month for stocks in general, it's typically been a great month for technology stocks. Specifically, it's the time for companies to showcase their new products which will be critical for the holiday sales season and beyond.

Acquisitions to Boost Product Portfolio

Acquisitions made by Apple (NASDAQ:AAPL) over the last 12 month period indicate that they will make the upcoming iPhone more feature-full. With many competitor phones increasing in size, it appears that Apple plans to stick with the current aspect-ratio-to comfort phone handling. If this is, indeed, the case, then the only way to combat the competition is to aggressively add more features. Some recent acquisitions will help Apple reposition their brand to remain at the 'premium' level of products.

Apple acquisitions over the past few months have included:

  • Embark: to integrate its mass transit navigation system into Apple Maps.
  • video discovery service
  • Passif Semiconductor: Bluetooth Low-Energy chip company
  • HopStop: transit navigation service
  • Locationary: local business search firm

Recently, Apple announced its most recent acquisition, AlgoTrim - to be effective on August 28th. A Swedish startup with revenue earnings of $3 million USD for 2012, AlgoTrim builds codecs and designs solutions to maximize performance of data, mobile imaging, video, and computer graphics while minimizing memory requirements. The acquisition will help Apple in terms of allowing it to build more efficient media delivery for mobile devices by using less bandwidth, while still preserving quality.

Benefits from AlgoTrim:

Maximize performance of data:

Fast decompression speed as well as a wide range of compression levels yielding a wide trade-off of compression ratio and speed. The AlgoTrim "Fast Compression Library" is the fastest lossless codec on the market, with speeds 4x faster than other similar codecs.

Mobile Imaging:

AlgoTrim provides more advanced imaging solutions, such as super resolution, and will soon offer other imaging solutions that will bring "modern computational photography" to mobile devices which uses camera sensors, computing, actuators, intelligent lights and other components to vastly improve on the current 2D pixel based model of image representation. Long story short, AlgoTrim will boost Apple's iPhones' ability to capture stunning images at a low power consumption level and with less memory space.

Minimizing memory requirements:

AlgoTrim deals in all kinds of data compression to help save on memory. Mobile images, video, and graphics will be squeezed tiny without compromising output.

Efficiency in processor performance:

AlgoTrim focuses on getting more out of mobile processors to combat heat problems and unreceptive screens.

Extended Battery Life:

Execution performance of applications affects power consumption and highly optimized applications yields extended battery life.

It could pave the way to better iOS device battery life, and much improved photo and video quality across Apple's full line-up of devices.

An AlgoTrim acquisition could help Apple compete in image quality with Nokia's PureView oversampling system and others. In addition, AlgoTrim technology could improve the iPhone's ability to take photos in low-light conditions, or more accurately capture the lighting in any given scene.

Apple's strategy of picking up smaller startups, with niche expertise, has yet to be fully proven. However, in an industry where startup valuations can quickly skyrocket, it seems to be a pragmatic solution to acquire intellectual capital at a reasonable price.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.