from the January 2014 issue

Apple confirms $350m acquisition of Prime Sense

After 18 months of talks, and despite official denials by PrimeSense Ltd., Apple Inc. (Nasdaq: AAPL) confirmed that it will acquire the Israeli gesture recognition company for $350 million. "Apple buys smaller technology companies from time to time, and we generally do not discuss our purpose or plans," said Apple.

PrimeSense, founded in 2005 by president Aviad Maizels, CTO Alexander Shpunt, Dima Rais, Ophir Sharon, and Tamir Berliner, is run by CEO Inon Beracha. The start-up's five founders are expected to rake in $50-85 million from the acquisition.

PrimeSense initially showed great promise, mainly because of its close relations with Microsoft Corporation (Nasdaq: MSFT). The software giant embedded PrimeSense's technology, which comprises both hardware and software, in the Kinect system used in Xbox 360 game consoles. PrimeSense earned big money, not just financially, from its successful relationship with Microsoft, reportedly amounting to almost $200 million from Xbox 360 sales.

PrimeSense is Apple's second acquisition in Israel; in December 2011, it acquired Anobit for $400 million.

Apple will embed PrimeSense's technology in the smart TV, which is scheduled for launch in 2015. Apple may take the technology one step further, and offer it in the company's other products.

PrimeSense's contribution to Apple will apparently not be limited to smart TVs. PrimeSense allows users to purchase, via tablets, clothing and footwear by scanning their bodies. There is a good chance that Apple will install this technology in iPads.

Reprinted from the Israel High-Tech & Investment Report January 2014

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