Apple Wants Anobit - Why?

Technology giant Apple is negotiating to acquire Anobit, an Israeli flash storage manufacturer, for about for $400 million to $500 million. People must be wondering why.

Apple seldom bought hardware companies in its history. The only hardware companies Apple bought in the past to decades were Steve Jobs-founded NeXT, Raycer Graphics, Intrinsity and P.A. Semi.

While NeXt developed and manufactured a series of computer workstations intended for the higher education and business markets, Raycer Graphics is a graphics chip designer. Austin, Texas-based Intrinsity, known for making zippy versions of a computer chip often found in mobile devices, and P.A. Semi is a chip designer that develops high end, yet highly efficient processors.

Each of these companies had a vital role to play in Apple's growth story, especially NeXt, whose acquisition paved the way for Mac OS.

Anobit will be Apple's first acquisition in Israel, and for the new CEO Tim Cook, it will be his first one.

Why the most valuable company in the world wants to invest so much money in Anobit? According to Hebrew newspaper Israeli Calcalist, Apple is dependent on the Israeli company's solutions for the iPhone, iPad and MacBook Air product lines, among other devices.

Anobit boasts of its proprietary MSP (Memory Signal Processing) technology, which enables the company to provide flash storage solutions for enterprise and mobile markets. The solution can not only improve the speed, endurance and performance of flash storage systems but also cut down their cost, TechCrunch reported, citing Calcalist reporter Assaf Gilad.

According to Anobit, its clients include the advanced flash manufacturers, consumer electronics vendors and storage system providers, in the world. The company is proud of its technology, claiming it has 21 granted patents and 95 in total.

Anobit was established in 2006 by Prof. Ehud Weinstein and Ariel Maislos. Now Weinstein is chairman and CEO and Maislos is president of the company. Both of them had also been a co-founder of their respective previous companies. According to the Calcalist report, currently there are about 200 employees in Anobit.

Hynix, a South Korean company provides Apple with flash memory chip, which uses Anobit technology. The flash memory chip is used in various Apple devices, including the latest iPhone 4S. Hence, if Apple acquires Anobit, without doubt, it can not only help Apple cut costs on manufacturing flash storage but also help boost performance of Apple devices, including iPad, iPod, iPhone, and MacBook Air.

In other words, Apple's move shows that the company is betting that the future lies with flash storage. But don't expect Apple's move to control their costs and design to translate into price savings for end-users.