Apple to buy Beats by Dre (1 Viewer)

Headscratcher for some folks, I think it could be a good partnership of premium brands with a streaming play as bonus.
Oh and it makes Dr. Dre a billionaire in the process.

http://www.theverge.com/2014/5/9/5698158/what-apple-is-really-buying-with-beats

In the short term, Apple acquires a fast-growing brand whose ability to sell electronics at a high premium is rivaled only by Apple itself. Beats, a 6-year-old company whose founders include Dr. Dre and record executive Jimmy Iovine, is reportedly profitable on revenues that were said to exceed $1 billion last year. Beats entered the market in 2008 with $350 headphones, and five years later commanded 59 percent of the market for headphones that cost more than $99

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http://www.engadget.com/2014/05/09/beats-apple-confirmed/

http://www.theverge.com/2014/5/9/5698632/dr-dre-hip-hop-billionaire-video

Good point! They also acquihire Jimmy Iovine for his Music Industry clout:
http://online.wsj.com/news/article_email/SB10001424052702304431104579550392146532138-lMyQjAxMTA0MDAwOTEwNDkyWj

If he joins Apple, Mr. Iovine is expected to use his industry clout to help strengthen iTunes Radio, with a particular eye toward generating more advertising revenue, one of the people familiar with the matter said.

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The Beats! Streaming Audio service is a very different format from things like Pandora and Spotify.. primarily in that it offers exclusive design remixes, music not available elsewhere, life performance types/etc. This 'difference' was supposed to set it apart. The last I knew, it was at about 250k subscriptions, far less than Pandora or Spotify, but it has a selling model that gets Apple immediately into the game and gives them something unique to provide that isn't just another Spotify/Pandora knock off.If Apple can emphasize the 'original content' and push it as their stream solution, that's a win for them.Beats headphones are not the most accurate and (IMHO) often overpriced. However, Beats represent fashion as much as form, and Beats due to the way they are configured (Bass heavy over a standard EQ) will still attract the crowd that likes that. When people say 'Beats are so overpriced' I often think: yeah, so are Nikes, I can buy great shoes for $29, but people still buy Nikes. Adding Apple's cachet to the Beats Name just improves that status.And yes, with this sell, Dre, who owns more than a 1/3 share, will shoot over $1.4B in networth by my figures.. and it's unlikely he gives up 100% of shares, more likely that all three involved get Apple shares as part of the deal too.

Om is not a fan of this deal:

[*]Someone wrote that Apple will get design help from Beats Audio. LOL. Beats design is done by an outside agency, started by ex-Apple peeps. (#) [Outside agency is Robert Brunner’s Ammunition Group and Brunner hired Jony Ive.]
[*]Google spends $3.2 billion to buy the future & data. Apple buys bad headphones & a junk-service from music promoters. Worse use of corp $$$s. (#)
[*]Buying BeatsAudio (aka a Baboon’sAss) is a good sign that Apple is pretty much out of ideas & unable to come up w/an anti-Spotify strategy. (#)
[/list]

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http://om.co/2014/05/08/on-streaming-apple-beats-spotify/

Too much of his analysis focuses on the 'what if Apple had built this on their own, it'd be better..' Sometimes there is a benefit to taking out the market leader. Beats is the brand name market leader in that segment. That's just a fact. And comparing Beats to Spotify completely misses what was supposed to make Beats different and gives it value to Apple. If Apple can get a way to turn that original content into exclusive Apple only buys, that helps them.

I don't think the deal is 'fantastic' but I completely get it. And no, someone entering into the headphone market right now no matter how good would have to overcome the fashionpiece that became of Beats. Just ask: Skullcandy, Sony, JBL and others who all tried to introduce fashion lines and got squashed

From last year, how Beats bamboozled Monster.
http://gizmodo.com/5981823/beat-by-dre-the-inside-story-of-how-monster-lost-the-world?src=longreads&utm_content=bufferbc7d5&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

Love fest or no, this was never going to be a Steve and Woz moment of geek kinship. This was business from the start—and while Noel knows it now (Jimmy wanted to "own both ends," he says), Monster didn't show much acumen when it mattered. Monster wanted to jumpstart its headphone business. Badly. In the turmoil of the mid-00s, Dre and Jimmy needed to find something other than records to monetize. Badly. But the money arrangement was destined to be dominated by Iovine, a man who'd gone head to head with Steve Jobs, and ran a music empire—not some small deluxe cable firm. The Monsters knew that if they could harness Dre's "entertainment and sports" contacts they could launch their company into the mainstream. They were right, but they were also woefully underprepared for the path to success; in the process, they blew almost every business decision possible.

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Good radio presentation tonight about this in which analysts pointed out that the Beats by Dre selling point opens up unique marketing for Apple.. you could see custom Apple iPods by Dre and custom cases/etc. Don't be surprised if it happens

Beats, Bose and Monster represent the best of the snake oil salesmen; it's all in how you tell it, dude. I get why Apple is buying Beats: they own the lion's share of the headphone market because they are a fashion accessory and their target demographic does not know any better. I own Audio Technica ATH-M30 headphones which cost less and are head and shoulders above Beats. Smart move by Apple and as long as they keep the businesses separate and don't try to integrate "Beats Audio" into their Macs, iPads and iPhones, they can make crazy money off a subpar product line without tainting their bread and butter.I also understand Apple is after the Beats subscription service and may be hoping to land some exclusive music contracts. That could be a quick money maker too.

While I don't know if this is accurate, I have read multiple reports that indicate the deals for streaming that are currently in place with Beats would not transfer to Apple and would have to be renegotiated.

Apple obviously has reasons for this deal but smart people do dumb things all the time. Of course, I am certainly not qualified to judge but I will say this, if the story broke on April 1, nobody would have believed it was true.

-Keith

mattCR said:

Too much of his analysis focuses on the 'what if Apple had built this on their own, it'd be better..' Sometimes there is a benefit to taking out the market leader.

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Not just the market leader but a THOUGHT leader. You cannot buy the cultural cache that Beats has with fans of Hip Hop.

I guess no more HP with beats audio...And HTC already jumped ship from Beats to Harman "boom sound"(??).Not that HTC did anything worthwhile with Beats...

Official but not as $$$ as reported:
http://www.apple.com/pr/library/2014/05/28Apple-to-Acquire-Beats-Music-Beats-Electronics.html

http://recode.net/2014/05/28/apple-buys-beats-for-3-billion/

Apple says it will keep the Beats hardware brand intact, as well as the Beats Music streaming service. It also says Beats Electronics co-founders Jimmy Iovine and Dr. Dre will join the company as full-time employees.

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I'm trying out the free 14 day trial now. It's nice, if I didn't have 20k tracks already I might be tempted, but I like owning.

I buy this. This makes sense.
https://medium.com/@mvakulenko/to-understand-beats-you-need-to-understand-lady-gaga-e334de3da6d2

Jimmy Iovine sees the opportunity in changing the game and “building a communication between a fan and an artist.” In other words Beats Music is not yet another streaming service designed to sell music, but a platform for artists to build businesses and “sell everything but music” as Troy Carter says.

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The strategy lesson from Apple and Beats is this: Look for opportunities to build platforms connecting consumers with value-adding complementors. (Think a “connect-ing business”, and not a “connected business”.) Capture value through bundling with the platform that will buy you hyper-growth driven by network effects and insurmountable competitive advantage. (And of course don’t tell anybody what’s you are up to before it’s ready.)

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I've been following the topic and rumors a bit, with bemusement. I didn't get it then; not sure I do now. My initial reaction was negative. As a fan of Apple's products, I hope to hear about it buying outstanding technology companies that lead to amazing new products and features. So far, they've spent comparatively small amounts on strategic buys. When they finally spend billions, they buy Bose. I mean Beats. WTF? There's no technology here for amazing new products. It's bass-heavy headphones designed by Monster. And a streaming music service. Apple already has one.

I'm unenthused as a looky-loo.

So what of it? What's the plan? Speculation seems to be it's a billion-dollar aqui-hire for Dre and Iovine. What is to do exactly what Sam says (with unintentional irony) can't be done:

Sam Posten said:

Not just the market leader but a THOUGHT leader. You cannot buy the cultural cache that Beats has with fans of Hip Hop.

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The other seems be, again with the aqui-hire, to bring in entertainment and media product skills that Apple lacks. And connections to media companies that Apple lacks.

The third benefit might also be some profitable headphones and another streaming service that maybe will get huge.

I'm skeptical that this will lead to any new products or features that I will care about. But hopefully I'm wrong

The reviews of the new Beats released yesterday have been pretty favorable. Get the fashion crowd and mostly satisfy the enthusiast crowd? That could be compelling.http://www.engadget.com/2014/05/29/beats-solo-2-headphones/http://mashable.com/2014/05/29/beats-solo-2-review/

Unless you want to, you know, use them."Despite a new headband and ergonomic, pivoting earcups, the headphones still feel like they're pinching in on my head -- a feeling that gets uncomfortable about 15 to 20 minutes into a listening session.""Because the Solo² cups are smaller than what you find on the Studio line, the fit can be pretty tight. I have a small head, but still found my ears hurting after wearing the phones for a few hours."Could be these reviewers. Or acceptable trade off for the price and portability.In comparison: I wore my Bose QuietComfort headphones for 8 hours on Thursday, flying cross-country. No pain or discomfort like they describe from the Beats.

You know those Bose get pretty mediocre reviews for audio quality too =p The QC15s anyway....Funny enough, I just bought my first ever pair of 'better than consumer grade, middle of the road audiophile grade' cans, the Beyerdynamic 990s in 32 ohm (perfect for portable electronics).http://www.amazon.com/beyerdynamic-990-Premium-250-Ohm/dp/B00193FT26I am not an audiophile but can't claim to have listened to anything better than this. The thing that sold me is the velour ear pieces tho, most comfortable headseat I've ever worn. No heat either!

I failed to convey my point The reviews are saying these headphones are painful in normal use. That's not good. This is exactly what you're saying: you bought for ultimate comfort. These Beats reviews are saying they're exactly the opposite about these beats headphones.In contrast, my Bose (which do get good reviews in the noise-canceling headphone category) are fine for 8 hours. But, without snark, this us not different from Apple. They've sacrificed comfort for style on products. So, maybe it's a fine branding fit.

Amazon reviews are a bit of a misleading thing. I have a pair of bests and I find them quite comfortable, especially for a long plane trip. They aren't as technically good as the sensenheisers I keep at home, but they are better long haul comfort and they are way easier to run in an airport with.