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Business

Apple’s big plan may be to snap up small firms

Apple has kept the stakes low in recent years.

YASUYOSHI CHIBA/AFP/Getty Images

Apple has kept the stakes low in recent years.

NEW YORK — One company used sensors to read body movements. Another recommended TV programs. Several others offered location and mapping services.

All of them had at least one thing in common: They were among the more than 20 relatively small companies Apple says it has bought within the last 15 months.

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As fellow tech giants have reached billion-dollar deals in recent years to add significant new arms to their businesses — Facebook buying WhatsApp for as much as $19 billion, and Microsoft buying Nokia’s handset business for more than $7.1 billion — Apple has ventured down a different path.

The company has avoided jaw-dropping takeovers in favor of a series of smaller deals, using the companies to buttress or fill a gap in products that already exist or are in development.

Still, in the past few years, Apple has gradually increased its overall spending on these acquisitions. In the last quarter, for instance, Apple spent $525 million on acquisitions, nearly double what it spent in the same period a year earlier.

And while the deals may be small — particularly given Apple’s nearly $160 billion cash hoard — they offer a window into where the secretive company is headed and which products and services it is trying to build or improve.

Apple’s biggest acquisition last year was PrimeSense, a company with about 150 employees that Apple bought for $300 million to $350 million, according to reports. Prime-Sense developed sensors that helped Microsoft let Xbox owners control games using body movements, and some analysts say Apple could eventually apply PrimeSense’s skills and technology to a television set.

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Apple also purchased Matcha.tv, a service that recommends things to watch on TV, another acquisition that signals its strong interest in the living room.

And Apple’s purchase of location data services like Locationary, HopStop, and Embark suggests a steadfast interest in Internet services — especially mapping, where Apple has been harshly criticized for lacking the competence of its competitors Google and Nokia.

“They’re preemptively investing in areas where they think there are opportunities to grow,” said Ben Bajarin, a consumer technology analyst for Creative Strategies who follows Apple. “Without doubt Apple is a bit more focused and lean in their approach and disciplined about the things they buy.”

But as the growth of Apple’s profit has slowed in the past couple of years, some pundits and analysts have called for the company to break into other markets and create new revenue streams through a game-changing deal. Investors and analysts have suggested that Apple buy Tesla to build cars, Facebook to get into advertising, Netflix to get deeper into the entertainment industry, and even Yahoo to get into the search business.

Apple declined to comment for this article, but none of those possibilities appear close to coming true.

Still, Timothy D. Cook, the company’s chief executive, has said that Apple would have no problem paying billions for another company if it would help Apple make more high-quality products.

Apple has kept the stakes low in recent years. Several of the companies it has bought had as few as one or two people, like SnappyLabs, a one-man developer of a camera app. The founder, John Papandriopoulos, an electrical engineer, had developed an app to make the iPhone’s camera take high-resolution photos at a faster frame rate than Apple’s built-in camera software. Apple bought the company this year and made Papandriopoulos a software engineer.

These tiny acquisitions, made in large part to add the skills of an individual as much as the company, are known as acquihires in Silicon Valley. Most other major tech companies make them frequently, as well.

When Apple buys a startup with more than a couple of people, it is often looking for groups with specific skills who work well together as a team, said a person who worked at a startup Apple acquired last year, who spoke on the condition of anonymity because he was not authorized to speak to the press.

Apple then takes these small teams and assigns them to new projects or pairs them with older teams at Apple.

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