Apple is biting back

Wired has a story by Brian Chen about Apple's plan to eat Silicon Valley:

Apple CEO Steve Jobs suggested that the cash-rich computer and phone maker might be in a good position to start snapping up struggling tech companies. During Apple's earnings call Tuesday, Steve Jobs proudly reported that Apple had $25 billion "safely in the bank", and zero debt. More interestingly, he said he saw a bright side to the economic meltdown. "This downturn may also present some extraordinary opportunities for companies that have the cash to take advantage of it," Jobs said. The obvious opportunity given the country's state of financial ruin is for Apple to swoop in on smaller companies while they're vulnerable and cheap. But with the iPhone netting $4.6 billion in revenue this quarter, making Apple the world's third-largest mobile supplier, it's difficult to imagine what exactly Apple would need to acquire.
The company is flush with cash, has a solid lock on the suppliers and wireless carriers it depends on, and has plenty of talent on its payroll. Plus, many of the obvious acquisition targets on the market now (such as Dell or Yahoo) are stumbling commodity vendors with no clear direction and a dubious track record of innovation, especially recently, not exactly Apple's kind of companies.
So if Apple is going to make acquisitions, where is it likely to focus its attention in the coming year?
Wired spoke to three financial analysts who were each stumped by the question. In the past, the vast majority of Apple acquisitions have been software-related. And, given the huge success of not only the iPhone but Apple's popular MacBook line as well, it doesn't appear the corporation needs to absorb any of the smaller companies that provide hardware components. Here's a rundown of some possibilities.
Adobe
Apple markets its computers as ideal for creative users, and a vast number use Macs to run Adobe software. But Adobe's market capitalization currently stands at $13.3 billion, half of Apple's piggy bank. Besides, Apple historically acquires smaller companies that they can still influence to fit their own vision, and Adobe's far too mature for that.
Synaptics
A much smaller company that Apple could target is Synaptics, which manufactures the touch pads for iPods. Synaptics also develops touchpads for an iPod competitor, the Creative Zen, so theoretically Apple could absorb Synaptics to save some money on parts while squashing any chance of competition. But with Apple's grip on the digital music market with iTunes and the already tremendous success of its iPod, this also appears to be an unnecessary investment.
Vudu
"Who?" You know, the set-top TV box/digital-movie service that's competing with Apple TV and which won a Best of Test 2007 designation from Wired. If vulnerable's what Apple is going for, Vudu would qualify: the company laid off about 20 of its 100-person staff in August. To give Vudu credit, the company offers about 5,000 movie titles thanks to having partnerships with every major studio and 18 independents. Apple's iTunes Store offers only about 1,000 movie titles and only deals with major studios. Then again, Vudu's partnerships probably wouldn't transfer over if Apple acquired the startup.
iPhone app developers
Let's think even smaller. Jobs did emphasize during the quarterly earnings call that Apple has "some of the most talented employees" in the world. Perhaps Apple could hire an independent developer who's making big bucks off iPhone's App Store to code some apps for them? Steve Demeter springs to mind: He made $250,000 off his iPhone game Trism in just two months. However, I've spoken to Demeter a number of times, and he's extremely passionate about his work; I'd imagine he'd like to fly solo so long as he's still making big bucks.
The Wild Blue Yonder
Here are some wacky ideas for companies that Apple could buy with a little more than the spare change it finds in the couch cushions:
Cray ($115M), in case Apple wants to corner the market for creative supercomputer users.
Alcoa ($3B), for all that shiny aluminum showing up in the new MacBooks.
Seagate ($3B), in case the company feels like reinventing the hard drive.
General Motors ($3B), in case Jobs wants to reinvent the car.

Rico says he'd love to see what Apple would come up with if they owned General Motors, but that's not gonna happen. Also, with all that cash sitting there, they better hope their own stock price doesn't get low enough that they become a takeover target...