June 11, 2014

Dropbox acquires Droptalk for private messaging capability

Faced with competition from other industry players, companies must find ways to improve their offerings. One way of accomplishing this is to acquire technology from another company to bolster current offerings and gain an edge over the competition. 

We recently touched on this point when discussing Chegg's acquisition of InstaEDU. Chegg, a company that provides services for students, was able to add InstaEDUs tutoring capabilities to improve its offerings. This type of acquisition strategy can be used to position a company as a stronger competitor in the market. 

It is not uncommon to see these types of acquisitions in the technology industry, where there is a great deal of competition. Another recent example of a company making a beneficial technology acquisition is Dropbox, a company that provides cloud storage and backup and sharing. Dropbox has recently acquired Droptalk, a company that creates technology allowing users to share private links, according to TechCrunch.

The technology is of interest because it may appeal to people who do not want to send email. Instead, they are able to send a link directly from a Google Chrome extension and the company is working on expanding this capability. 

The article detailed that this move made sense for Dropbox because of the messaging capability that it had developed. However, according to an article in CITEworld, it's possible that this acquisition strategy could be problematic for Dropbox because it may inhibit possibilities for third party developers.

Whether or not this acquisition strategy will prove to be a success for Dropbox remains to be seen. Companies considering a merger or acquisition can benefit from a consultation with an M&A advisor that will help them develop a strategy for success.