Taking a Bite Out of Apple’s Potential Beats Purchase
If you haven’t heard, there’s been a lot of noise surrounding Apple’s potential purchase of Beats headphones. Apple is expected to announce whether or not the purchase went through (all signs indicate that it did) in the upcoming week, and the hullaballoo around the acquisition is thick.
For those unaware, Beats is the producer of Dr. Dre’s headphones, and a lot of the controversy is aimed at their target demographic. However, there are many reasons why Apple would be interested in purchasing the headphone giant. For example:
- Apple doesn’t have a current headphone business. Iconic ear buds are one thing, but it is surprising Apple hasn’t broken into the headphone market. It’s a natural step, given their position as the premier music-player producer in the market.
- Apple doesn’t have a music streaming service. Of course, there’s the behemoth iTunes, but Beats offers a Spotify-like service that is attractive to Apple as a further diversification into digital music delivery.
- Jimmy Iovine. This is Beats’ cofounder, and he has some pretty interesting ideas about the future of music. While Beats headphones have generally gotten poor reviews from audiophiles, Iovine has proven quite brilliant and would likely be a meaningful collaborator for Apple CEO Tim Cook.
- It’s small change. The price for Beats is rumored to be at $3.2 billion USD. While this doesn’t sound like a bargain to the average Joe, the amount of money that Apple is swimming in makes this a good deal. Even if the entire venture is a flop, it’s not going to affect the dramatic success of the iPhone, iPod, iPad or iAnything.
- Branding. Beats is already one of the front running brands in the headphone business, with only Bose as a true competitor. With this deal, Apple doesn’t have to come up with its own branded headphones and compete against Beats; it will become Beats.
- Demographics. This is the slice that’s causing uproar. Apple traditionally appeals to a more affluent hipster-techno crowd, while the Beats crowd is more urban. The deal will either bring these two demographics together or push them further apart.
At the end of the day, the Beats gamble is a small one for Apple to take, and the dividends look promising. Only time will tell whether the acquisition will work (and days will tell whether or not it’s going to be made), but it’s certainly an interesting merger to keep an eye on in the tech industry.