As you may have already heard, a recent report from the Financial Times claims that Apple is preparing to acquire Beats Electronics LLC, the headphone manufacturer immensely popular among teenagers, for a whopping $3.2 billion. The deal is uncharacteristic of Apple, reflecting a divergence from the in-house design philosophy that existed during Steve Jobs’ era, but the present-day incarnation is a very different Apple. Obtaining control over a brand that single-handedly transformed headphones from a piece of specialty hardware, only appreciated by an informed tech savvy subculture, into an object of mainstream social desire, has the potential to hatch “The Next Big Thing” in consumer gadgets.
Jobs’ obsessive-compulsive demand for perfection allowed Apple to thrive, producing innovation after innovation to the point of people being unable to imagine life without an Apple product. Yet the three years following Jobs’ death have seen a much more conservative company, too self-confident to invest in the R&D needed to spark something game-changing; it was only natural that Apple’s competitors would step up to fill these shoes. Although the Beats acquisition will be Apple’s most expensive purchase to date, Apple is sitting on a ton of assets; $3 billion is nothing to them.
Benefit 1 – Hardware
With all the hype surrounding Android products of late, Apple could really benefit from reattaching a bit of “coolness” to its name; why would anyone purchase an overpriced iPhone when Samsung Galaxy devices offer tons more features with far less digital rights management software? Repositioning Beats as an Apple product will absorb a brand that currently holds 46% of the headphone market among teens, one of the two largest product consumers groups in the U.S. This allows Apple to enter the headphone hardware market unscathed by the likes of what would’ve been its largest competitor.
Benefit 2 – Marketing
The marketing genius behind the Beats phenomenon is Topspin Media, an e-commerce and marketing platform incidentally owned by Beats. Perhaps the acquisition has less to do with hardware and more to do with Topspin Media. The firm’s creative prowess and ability to create a compelling product need harkens back to the Apple of Steve Jobs’ time and may potentially infuse the creative energy that’s been lacking these last few years.
Benefit 3 – Music Streaming
Headphones and marketing aside, Beats Electronics LLC also owns Beats Music, a music-streaming service rivalling Spotify in popularity. Apple’s iTunes Radio streaming-music feature may offer a similar experience, but the platform’s relationship with the other two is more akin to a Google Plus versus Facebook kind of relationship. The Beats Music stands to make Apple’s platform publicly meaningful.
The acquisition itself hasn’t officially been made public by either of the two parties involved, but a video was posted on actor/musician Tyrese Gibson’s Facebook showcasing Beats headphone’s spokesman Dr.Dre confirming the deal. This video has been suspiciously taken down.
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