From ad networks to customer support, developer tool startups have been popping up in the last few years to help app developers write less code, reach the right users and monetise. 2014 was a year with a wealth of M&A activity with over 30 transactions in the developer tools space.
Developer tools consolidation
[tweetable]There are more than 1,000 developer tools available in the market[/tweetable], with many of them popping up from one day to the next and (some of them) quietly disappearing after a short period of time. That means there’s one developer tool startup for every 1000 apps!
Ad networks, user analytics, and cross platform tools feature prominently among dev tool startups acquired in 2014. The acquirers were typically large companies, such as Yahoo, Apple, Google, Facebook, Twitter, Unity and Microsoft, who are building up Mega SDKs with comprehensive developer tool portfolios. The majority of dev tool startups cannot survive on their own for long and are seeking VC investment or buyouts by the larger players in the field. Developer tools need a long period of seeding the market with free products, before they can hope to see conversion to a premium tier – let alone figure out what developers are willing to pay for.
In 2013, it was backend-as-a-service tools that were a must-have developer offering and the subject of acquisitions, most notably with Facebook and Parse. [tweetable]In 2014, it was ad networks that were the prime acquisition targets[/tweetable], and with cutthroat price competition and complex landscape this is only bound to intensify. We’re also starting to see an evolution towards UI technology as a developer differentiation, with the acquisition of Form by Google which was subsequently released for free in less than 3 months.
In the table below we’ ve tracked 33 developer tool acquisitions in 2014 (let us know if there are any we ‘ve missed?)
Developer tools acquisitions of 2014:CompanyProduct descriptionAcquired byDateAcquired forSense NetworksMobile location advertisingYPJan 2014–Little Eye LabsPerformance analysis and monitoring tools for AndroidFacebookJan 2014$10-$15MInsightsOneCloud-based predictive analytics solutionsApigeeJan 2014–SparqMobile marketing platformYahoo!Jan 2014–GetJarIndependent app storeSungy MobileFeb 2014$50MBurstlyBeta testing, user analytics and monetizationAppleFeb 2014–CloudantDatabase-as-a-service for web and mobile developers.IBMFeb 2014–ApplifierUser acquisition SDK with video ads and game replay SDKUnityMar 2014–AdMobiusMobile Audience Management PlatformLotameMar 2014–TesthubApp testing servicesApplauseMay 2014–Mocean MobileMobile Ad networkPubMaticMay 2014–DistimoApp store analyticsApp AnnieMay 2014–CapptainPush notifications and user feedbackMicrosoftMay 2014–TapCommerceMobile ad retargetingTwitterJun 2014$100MAppurifyMobile testing platformGoogleJul 2014–FlurryUser analyticsYahoo!Jul 2014$200MMobileDevHQApp marketingTuneAug 2014–5RocksUser analytics for game developersTapjoyAug 2014–Mongoose MetricsCall tracking technologyIfbyphoneSep 2014–FeedHenryCross-platform toolRed HatSep 2014$82MPlayHavenMobile gaming monetization platformScience MediaSep 2014–MopayMobile paymentsBokuOct 2014–DucksboardDashboard visualisation technologyNew RelicOct 2014–FirebaseBackend as a serviceGoogleOct 2014–TelerikUI frameworks and cross platform toolsProgress SoftwareOct 2014$262.5MMobFoxMobile ad networkMatomy Media GroupOct 2014$17.6MTap for TapPromotion exchange for app developersPretio InteractiveOct 2014–Corona Labs2D game engineFuse PoweredNov 2014–AppifierMobile App BuilderAppMakrNov 2014–AppiaUser acquisition platformMandalay Digital GroupNov 2014$100MTapticaMobile user acquisition platformMarimediaNov 2014$13.6MNexageMobile ad networkMillennial MediaDec 2014$107.5MHockeyAppApp performance management and beta distribution serviceMicrosoftDec 2014–
Even though the pace of acquisitions was down slightly in 2014, as indicated by the graph below, it still remains high compared to the 2011 and 2012 levels. As our research demonstrates, developer tools are correlated with both developer experience and revenue – and as such are becoming the competitive arsenal of those that want a fighting chance in the app stores.
M&As accross the 2011-2014 period:
In 2015 we expect to see the levels of developer tools M&A continue unabated, as larger players – from ad networks to media companies – leverage developers and their apps as a user acquisition channel. And with dev tool startups competing globally for a pool of 5.5 million app developers, the cost of developer acquisition is only going upwards, and not many startups will be able to afford it.