The big tech/consumer electronics story today is Apple’s (alleged) move to buy Beats, the Jimmy Iovine/Dr. Dre company that sells more headphones than anyone else on the planet and operates the Beats music streaming service. The price? About $3.2 billion USD. If this all goes through and that number is correct, it will be one of the biggest purchases Apple has ever made.
Knowing that Tim Cook and co. don’t do anything without exhaustive analysis, Apple watchers are wondering what’s the rationale behind such an expensive and high-profile deal. Here’s what I’m thinking.
1. Apple covets the headphone market. The best way to immediately dominate is to buy the biggest player outright. Profits at Beats are huge. Their marketing is top-notch. And sonic quality aside (I don’t like how Beats sound at all), the quality of Beats gear is generally very good.
2. Beats Music works very well with Android users. Buying it would mean Apple won’t have to build iTunes for Android. Or for Windows Phone. Or any other OS.
3. A boost in the cool factor. There are millions and millions of people who haven’t been sucked into the Apple Reality Distortion Field. Millions of Beats lovers can be brought invisibly into the sphere of influence.
4. Even though the Beats Music streaming service doesn’t have much in the way of subscribers–it’s only been active since January–iTunes Radio isn’t doing that well, either. This takes a competitor out of the equation.
5. Apple wants Jimmy Iovine for…something.
6. Beats’ Illuminati is stronger that Apple’s Illuminati.
7. There’s connection between Apple and Beats that goes back years. And it involves Jonny Ive.
That’s all I’ve been able to come up with so far. But like I said, I’m probably missing many, many factors in this decision.
Meanwhile, Music Industry Blog has these thoughts. And then Billboard talks about this potentially be a major turning point in the evolution of streaming music. Hey, remember when Apple bought a company called SoundJam last century? Who would have thought they’d turn that into everything that became iTunes.
We will watch with interest.