$3.2 billion is a pretty big number, but nevertheless, it’s one that Apple seems to be happy to pay in order to bring Beats Electronics into the family.
Apple CEO Tim Cook decided it was time to make a big purchase, something Jobs supposedly tried to avoid whilst he was in charge, so what gives? What is Apple going to gain from buying Beats should the deal take place and how does it affect us?
Anything’s better than EarPods right?
Right now there’s a lot of speculation surrounding why Apple has finally decided to shell out cash in order to acquire another big brand. Beats most obvious draw is its headphones portfolio. Say what you will about the in-ears and on-ears that Beats sells, it sells a lot of them.
For whatever reason, the bass-heavy headphones pull some crazy numbers, ruling with 65 per cent of the US headphones market under its belt. Meanwhile, for all the incredible technologies that Apple has squeezed into its i-devices, the included ear buds and the subsequent EarPods have been consistently poor.
Whilst bundling Beats headphones in with future iPhones isn’t quite what I had in mind (it didn’t add anything to HTC’s phones), pushing a more distinctive and more premium out-the-box audio experience would only serve as another feather in Apple’s cap. Beats engineers might prefer pushing those deeper tones in their own products, but lending a hand (and an ear) to Apple’s iconic white earphones might help convert some Apple sceptics who haven’t yet been convinced by its mobile products.
Beats headphones also already feature heavily in Apple’s online and high street stores, buying the brand and bringing it in-house means that it scoops up even more sales from those looking to grab some beefier cans than those included in the boxes of its prized smartphones.
Beats Music could keep iTunes alive
Now hear me out, iTunes revolutionised the way we purchase and listen to music. Sure, other companies had tried similar things in the past, but Apple was the only one able to establish the right connections and push the service on a big enough scale to make it lucrative. Twinned with the success of the iPod, digital music wouldn’t be where it is today without iTunes, but today is a very different landscape to 2003 (when the iTunes Music Store first launched) and things have changed.
Spotify and other streaming services have risen to power as a result of a better infrastructure in the form of faster broadband internet and high-speed 4G internet for mobile devices. iTunes may still be selling a metric tonne of tracks for those looking for a pay-to-keep service, but it doesn’t really have anything unique enough to take on the big streaming rivals. iTunes Radio is a forgettable service that likely sees most of its use as a result of being a native part of the Apple experience, but Beats kicked off a music streaming service of its own; Beats Music at the start of 2014, and it’s gaining traction.
With only around 200,000 active users, Beats Music is still small, but it’s months, not years old like Deezer or Spotify, not to mention it’s yet to cross over to non-US markets. Beats has always drawn on a strong brand image with its products and the same is true of Beats Music. We’ve seen celebrity tie-ins from the likes of LeBron James, Eminem and even Ellen DeGeneres and despite its small user base; critics have praised the service for its smart music suggestion/discovery tools and expert curation.
Beats Music is just getting started and Apple could push it in front of every iOS and Mac user if it wanted. Alternatively it could bolster iTunes Radio with some of Beats Music’s recommendation technologies and even some of its star power.
Big investments mean new blood
Steve Jobs’ Apple shied away from big acquisitions and more often than not, looked to create its own services, hardware and software in-house with the exception of Siri, which retained its name, even after being bought by Apple. Beats shares a number of the same ideals as the Californian tech giant, but it’s entered into the world of consumer electronics from a very different angle, one that means it has a unique skill set that Apple can potentially take advantage of.
Perhaps Beats is only the beginning, acquiring another successful brand and all that that entails, means Apple could explore or approach new markets it wouldn’t have otherwise, invest in new technologies it wouldn’t have otherwise touched and build new products that are more competitive than ever.
We’re still waiting to see whether this deal is going ahead, but I for one think it sounds great.