The dollars and sense behind PayPal's acquisition of Duff Research

It's always interesting when a small developer gets acquired by a large, well-known entity, but the decision by eBay's PayPal division to buy Duff Research drew particular interest from online observers for what it said about the mobile commerce industry.

PayPal CTO James Baresse announced the news via the PayPal blog, where he saluted the achievements of the team at Duff Research--a firm of under 20 people based in Sunnyvale, Calif.--which has won multiple CES awards for its mobile apps. "This talented team of engineers will be joining the PayPal technology team to help us build creative and simple ways for our customers to use the PayPal digital wallet," Baresse wrote.

Several developers and analysts interpreted the acquisition as a sign of how difficult it's becoming for even the largest technology companies to effectively crack the smartphone payment market.

For the most part, however, the deal seemed to make sense to many people as an example of an established online giant staying nimble by focusing on where its customers are spending more of their time.

A blogger from Zacks Equity Research suggested that, if successful, the combination of PayPal and Duff Research could ruffle some feathers among a few other online giants, too.

Quote Mark

The acquisition will likely put PayPal in a better competitive position against rival mobile payment systems such as Google Inc's digital wallet, Isis, Square and others. As smartphone migration continues, eBay is seeing great opportunities in the mobile space. The Duff Research acquisition is yet another move by PayPal to strengthen its position in the mobile payments space," wrote Zacks.

If nothing else, the acquisition showed how even a startup app developer with little more than talent could grow through sharp focus and execution to being effectively recruited for a major app project.