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Apple acquisition of AuthenTec makes a lot of sense

Customers test the IPad. Apple devices may soon be able to recognize these fingers by their fingerprints.
Customers test the IPad. Apple devices may soon be able to recognize these fingers by their fingerprints.

Apple has a huge hoard of cash: $117 billion at last count. It's going to pay out a dividend to share some of the wealth with stockholders, but it's also going to make acquisitions. Except that Apple doesn't really have a long track record of making acquisitions. It's been content to innovate and grow on its own, rather than to go out shopping for innovation and growth.

But the announcement today that it will buy AuthenTec, a company that's focused on making mobile devices more secure, for $356 million should please Apple's investors and fans — as well as future customers. AuthenTec has developed a fingerprint-recognition technology that sounds like it maps perfectly to the touchscreen age. You use your fingers to manage the interface on iPhones and iPads, so it why shouldn't Apple's mobile security protocols be finger(print) based, as well?

As for future customers, Apple wants to challenge Microsoft in the business-user space and continue taking over for rapidly sinking Resaearch in Motion, the maker of the BlackBerry. Businesses value security — that was always a big selling point for RIM, which operates a secure server network. AuthenTec can provide a degree of device security to Apple products that goes beyond passwords. 

It's interesting to see Apple realizing that it can't build everything itself — and that it doesn't want to build everything itself. This acqusition is also small enough, and sufficiently strategic, that it doesn't feed into the argument I've been making that there's an acquisition bubble in Silicon Valley. Apple is buying AuthenTec because it wants to, not because it has to, as Facebook did with Instagram — for three times as much!

Follow Matthew DeBord and the DeBord Report on Twitter. And ask Matt questions at Quora.