[stinkytaco]

Failure for whom?

If I'm the one cashing out, then I think it's a successful model.

It's also driven by past successes in this arena. Over the years products like Powerpoint, Android and YouTube have all been acquisitions that have gone on to be huge successes for the parent company (I can actually think of a few more Google purchases such as Waze and DoubleClick).

Of course, that means other companies see this as a successful strategy and attempt to replicate it. Now there's a rush to find the best acquisitions targets, more companies enter the market, and at least some will be acquired based on hype alone, causing some companies who focus more on their hype than their product. Bubble ensues.

I think the real failure is at companies like Yahoo who buy the hype and not the product.

EDIT: I should also note that for some companies, it seems unlikely that they could have scaled without an acquisition. Making phone hardware or hosting so many videos is expensive. In their case, acquisition was really the only viable strategy for success.