Apple is buying Beats, the maker of ultra-cool headphones and Beats Music. The $3bn deal comes as an admission that iTunes Radio isn’t working and that Apple has entered a more mature phase, where it is BUYING coolness instead of CREATING it. Are its best days behind it?
Front page news:
So the rumors WERE true! Today it finally hit the tape that Apple has made Beats creators, Dr. Dre and music exec Jimmy Iovine, rich. Very, very rich in fact, and with Apple executive credentials to boot – they’ll be given the corporate titles of “Dre” and “Jimmy,” respectively.
Cash-flush Apple is shelling out $3bn for its largest acquisition ever, in what critics call an attempt to keep up with the cool kids. It’s true that the deal brings Apple a premium headset business that also boasts a coolness factor with Dr. Dre, Gwen Stefani and other brand ambassadors. But street cred isn’t worth $3 billion bucks. So what else is Apple looking for?
Reading between the headlines:
It is Beats Music that insiders say is the crown jewel here. Apple’s iTunes Radio has been struggling to turn music surfers into music buyers, falling behind streaming services likes Spotify and Pandora that don’t force you to buy every piece of music you listen to, which has been Apple’s model for so long. Thus the company chose to buy its way into a competitive stance by acquiring Beats Music service. Beats’ ultra-premium headphones and musical talents Iovine and Dre will certainly be added weapons in Apple’s fight against slowing digital music sales.
WWSD: What would Steve (Jobs) Do? Probably not this deal. Talk of this deal 3 weeks ago caused Apple to lose $5bn in market cap…$5bn because of a rumor! Think about it. This acquisition clearly signals something more – that the once infallible, ever-innovative tech icon is running out of ideas. Long gone are the days where the markets moved daily and had reporters like me spending hours on tv guessing the name of yet-to-be released products like new iPhones, the “iTablet”and appearances of Steve Jobs.
We haven’t seen that kind of innovation in years from Apple and, with this purchase, Apple shows that it is looking for an injection of fresh ideas from outside its Cupertino homebase. Beats will keep its name and branding too, highly unusual for Apple acquisitions which are usually “Apple-washed” once purchased. This is a different kind of “think different” from Apple.
The Street will quickly push past this, looking for answers about what’s next with hardware. Because this is nothing like an “iTablet” release, and it is the “i-something” products that drive the company. We’re still waiting for the iWatch, the television set and updates to Apple TV, but reports say we’re months off from that too.