Comcast, the Philadelphia-based cable giant, has finally announced that it’s buying Plaxo, a Mountain View, Calif.-based social networking & connected address book company, for an undisclosed amount of money. Plaxo, whose co-founders include Sean Parker, has raised $23 million since 2002 from VC firms including Sequoia Capital, Globespan Capital Partners and DAG Ventures.
This has been the worst-kept secret, with people speculating about the price of this acquisition. Plaxo and Comcast officials declined to comment on the price when I had a conference call with them earlier today. Even today the price range is being pegged between $100 million and $170 million. I have on authority that the price is $170 million including earnouts. This is yet another megamillion-dollar bet by the cable firm in its ongoing transformation into a web-based company with an eye on advertising dollars.
Plaxo Pulse is one of the most attractive aspects of Plaxo, Sam Schwartz, executive vice president of Comcast Interactive Media, said. He pointed out that this type of news feed could end up in the set-top box, and be utilized for adding social features to many Comcast services, including Fandango and Fancast. Comcast has a project called Tru2Way that allows developers to write applications for the set-top box.
While I understand that Comcast wants to socialize its various offerings, I have reservations about their ability to extend what is a more professionally focused address book-based tool into the consumer, non-techie market place. That said, Plaxo could be useful for Comcast in its small business market ,where the cable giant has had some success.
Schwartz hinted that Comcast triple-play subscribers might be able to make calls to each other using the VoIP technology via Click2Call. Free calls in regions where Comcast is available with Plaxo makes a lot of sense and has potential.
Recommended Reading: Dan Farber on Comcast-Plaxo.
I imagine the Comcast Interactive Capital venture capital arm was urging the company to do this deal. Aside from Plaxo’s spammy stumbles in the past, their service is pretty slick.
The trouble is that I see absolutely no fit whatsoever between Plaxo and Comcast. Comcast is a regional cable network operator in one country (yes you’re a big country, but still).
Plaxo is a global service provider, trying to capture a global service market. It will have to do this by working globally, but also bringing in national offerings to advertisers etc. There is no fit between Comcasts organization and all those national offices that Plaxo needs. Comcast doesn’t open any doors in Europe or Asia. It’s internal procedures are geared towards selling cable subscriptions, not to supporting advertising space in a very specific marktet.
Even a merger with Gigaom would have been a better strategic fit. Sounds like Endemol and Telefonica or AOL and Time Warner all over again.
@ rudolf… one word response to your comment: OUCH 🙂
let me explain why this is a trend.
a. all these companies waste corporate dollars on consulting companies
b. consultants have to recommend these “big buys” to “do something” in social networking; because the consultants read what’s hot on the blogs
c. “do something” usually includes a M&A recommendation with a Small-to-medium size independent social networking company, like plaxo or zyb or [name 100 others].
d. there is always some Corporate VP who takes the bait, drives the acquisitions, works for six month on the new team integration, then quickly realizes it’s a failure alltogether.
e. by that time, the consultants have moved on to other projects anyway…and are recommending some other M&A
do you think apple uses these extensively ?
I’d put my money on SimWorks being one of the next to go, they have been pushing phone backup for ages now. They ran a public beta called fonetango for a while but seem to have given up on direct to public and now focus on selling to phone companies.