Would Apple spend over $5 billion to immediately become a player in a fast growing industry?
In his weekly Power On newsletter, Bloomberg's Mark Gurman today said that Apple should consider offering a smart ring alongside the Apple Watch. The fastest way to do this would be for Apple to buy Oura, which is a privately held company with a $5 billion valuation. That figure was calculated when health company Dexcom decided to make a $75 million investment in Oura.
Dexcom produces the over-the-counter blood glucose machine called Stelo; with the new partnership, Oura ring wearers will be able to get data about their blood glucose readings as long as they are using the Stelo system which requires a diabetic to insert the device under his/her skin. If Apple were to acquire Oura it would not only have a smart ring to sell immediately, it could also augment the technology it has been working on for a non-invasive blood glucose system.
Diabetics need to obtain blood glucose readings before each meal to figure out how much insulin they need to inject before eating. Since testing requires that the diabetic draw a drop of blood, for some it can be a painful test. And for those without insurance, the disposable test strips can be expensive. Apple has been working to develop a non-invasive blood glucose sensor for the Apple Watch but such a health tool could still be years away.
Returning to the idea that Apple could buy Oura, any deal would probably cost Apple more than $5 billion which would be at least $2 billion more than the largest acquisition ever made by the company. In 2014 Apple bought Beats Audio for $3 billion. The second priciest deal was the $1 billion Apple spent in 2019 for intellectual property from Intel related to 5G smartphone modem chips. Apple used this tech to develop its own 5G modem chip which is expected to debut on the iPhone SE 4 next year.
A more typical Apple deal involves a lower-priced acquisition with a feature that can be utilized by Apple as soon as the next year. For example, in 2012 Apple bought biometric firm AuthenTec for $356 million and the following year the iPhone 5s was released with the Touch ID fingerprint sensor. Another good example is Apple's purchase of SRI International (SIRI) for $200 million in 2010. The next year, the iPhone 4s launched introducing digital assistant Siri.
Apple would probably prefer to develop its own smart ring. However, if time is of the essence, Apple can use some of the cash it has on hand to instantly become a leading player in a new industry that still has plenty of upside left.
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