Apple's Acquisition of Beats Met with Skepticism, but Jimmy Iovine May Be Key

Discussion in ' News Discussion' started by MacRumors, May 9, 2014.

  1. MacRumors macrumors bot


    Apr 12, 2001

    Since the Financial Times broke the news yesterday, numerous publications are now claiming Apple is in the final stages of acquiring Beats Electronics, a headphone company and streaming music service created by hip hop star Dr. Dre and music industry veteran Jimmy Iovine. The response to the news is mixed, with some experts offering compelling reasons for the deal and other pundits questioning Apple's rationale in pursuing what would be its biggest acquisition to date.

    Iovine has strong ties to the music industry and a long history of working with Apple, having met with Steve Jobs to discuss a subscription music service in 2003 and more recently in talks with Apple's Tim Cook and Eddy Cue about the Beats Music service before it launched earlier this year. In a recent interview with The Wall Street Journal, Iovine credits Apple as his inspiration for the idea of the Beats brand.
    If the acquisition proceeds, Iovine may join Apple as a "special adviser" to Tim Cook on creative matters. Iovine would bring to Apple his knowledge of the music business as evidenced in a AllThingsD interview from last year embedded below, and his insider influence that Wall Street Journal sources predict could be used to boost advertising on Apple's existing iTunes Radio.

    Apple also would acquire Beats' successful consumer electronics business selling high-margin headphones and its newly launched music streaming service. Apple could bring the Beats hardware brand under the guidance of Jony Ive and use it to create new music product lines and add new channels to sell Apple's products, suggests Re/code. The Beats music service is likely a longer-term investment, allowing Apple to accelerate any plans to offer a streaming music service for its iTunes customers, which number in the hundreds of millions.

    Analysts, however, are meeting the news of the high-priced acquisition with both contempt and confusion, noting that such an acquisition is out of character for the Cupertino company. One of the first to weigh in on the deal was Gene Munster, who called the acquisition a "bad idea" in an investor note.
    Apple pundit John Gruber of Daring Fireball was equally skeptical of the deal, saying "I don't get it."
    According to the original Financial Times report, Apple's acquisition of Beats could be announced as soon as next week. Negotiations are still ongoing with some final details yet to be ironed out, allowing for the possibility that "talks could still fall apart."

    Article Link: Apple's Acquisition of Beats Met with Skepticism, but Jimmy Iovine May Be Key
  2. Hastings101 macrumors 68000


    Jun 22, 2010
  3. TsunamiTheClown macrumors 6502a


    Apr 28, 2011
  4. tigres macrumors 68040


    Aug 31, 2007
    Land of the Free-Waiting for Term Limits
    This forum is filled with Beats haters, so I am not surprised that the news is hurting our ears.

    Be that as it may, it make no sense to me whatsoever.
  5. DrFu79 macrumors member

    Apr 25, 2008
    If true, this literally has to be the worst acquisitition i can think of.

    I hate Beats with a passion - all style, no substance.

    As a longtime (20+Years) Apple user, I don't want this kind of philosophy (further?) taking over Apple - all about fashion and brand. Angela Ahrends, Beats etc.

    Just make a damn good product and it sells itself by merit. Stop the fluff.

    Kids get off my lawn. I know.
  6. supersalo macrumors 6502


    May 14, 2010
    I love it. Because outsiders "don't get it", or "are not aware of any intellectual property within Beats that would drive the acquisition justification beyond the brand", that automatically makes it a bad idea.

    The most troubling is Munster's "investor note". How about not saying *anything* until there's more info about it, Gene? It's not like you're manipulating stocks or anything like that....
  7. Heltik macrumors regular

    Jul 16, 2002
    (i.e., there are no non-Apple sub-brands under the company umbrella).

    Despite being spun off from Apple, how about FileMaker?
  8. johncarync macrumors regular


    Aug 2, 2005
    Cary, NC
    Apple isn't dumb

    Analysts might not see it and I don't see the reasoning either. But Apple isn't stupid. They don't buy companies willy nilly. There is a specific reason they bought's just not apparent yet.

    It could be avoidance of a patent issue.
    It could be a technology Beats has under development.

    My guess is there's a patentable headphone technology Beats is working on in secret that is a game changer.
  9. TC03 macrumors 65816

    Aug 17, 2008
    The only thing Gene Munster would get was is Apple bought the tv division of Sony.

    Nonetheless, I don't get this deal either. It's a lot of money for nothing.
  10. 0xyMoron macrumors 6502

    Oct 5, 2012
    Really why should a company worth billions of dollars acquire another company before consulting MR forum posters first?
  11. FSMBP macrumors 68020


    Jan 22, 2009
    I agree with you. However, I have to think that Apple's officers, board-members, and others didn't make this acquisition on a whim. I doubt they took spending 3 billion dollars lightly.

    However, I still don't see the point...yet.
  12. NMBob macrumors 6502a

    Sep 18, 2007
    New Mexico
    The Beats headphone headband is as flat as iOS7. I'm pretty sure that's the reason they bought it. iHop is next.
  13. Fairfax macrumors member

    Aug 15, 2011
    Deep Web
    I am having a problem seeing how Apple benefits from this deal. Ive can design better looking headphones. Beats will only wane in popularity as time goes by. I doubt the streaming service has technology that Apple badly needs that they are willing to grossly overpay for. From the article, this basically sums up how I feel, "Separately, we are not aware of any intellectual property within Beats that would drive the acquisition justification beyond the brand.".
  14. JHankwitz macrumors 68000

    Oct 31, 2005
    OMG, I hope not. What I want is to pay a monthly or annual fee to play my iTunes stations 24/7 without any advertising. I already get way too much advertising.
  15. 2ms macrumors 6502

    Nov 22, 2002
    Here Apple goes down that path MS took.

    Not forward thinking at all.

    Guess that money's burning a hole in the wallet. Cook doesn't have the vision to do anything except apologize to the world that his company is successful and building solar power stations and making tv ads about it to plead for their acceptance.
  16. tod macrumors regular

    Oct 3, 2009
    I have always defended Tim Cook's Apple but this one has me puzzled and doubting. Apple can easily make their own minimalist headphones or music service or whatever. $3.2 billion is a lot to pay for a company that is basically just a name, where every product they make can easily be duplicated (unlike a Mac, for example, with the platform harnessing millions of man hours of accumulated software engineering over the last few decades).

    This acquisition honestly reminds me of one of those way overvalued tech purchases that crappy companies like Facebook routinely make.
  17. nzalog macrumors 6502

    Jul 25, 2012
    Google buys Nest and Apple buys Beats. What has the world come to? Embarrassed as an Apple user. :(
  18. jimmirehman macrumors 6502

    Sep 14, 2012
    Maybe to gain control of the beats music app, instead if competing just buy it and merge it with itunes radio
  19. Chupa Chupa macrumors G5

    Chupa Chupa

    Jul 16, 2002
    Honestly, if history is any guide, based on the extreme negative feelings about the potential deal around here, I'd say it's likely to be a quite profitable one for Apple longterm.
  20. Heltik macrumors regular

    Jul 16, 2002
    Perhaps Apple is looking to use this to further differentiate iPhone as a premium brand and win the "cool factor", which some say they are letting slip, back from Android.

    Personally I don't think Beats are premium or cool, or even particularly good products, but I guess there's the perception they are amongst a certain target demographic.
  21. tod macrumors regular

    Oct 3, 2009
    I would rather see Apple spend $3.2 billion on solar projects than buying a silly overvalued headphone marketer.
  22. Benjamins macrumors 6502a

    Jul 15, 2010
  23. touchipods macrumors regular

    Oct 9, 2012
    Wow, Steve Jobs would have never let this happen.
  24. 3N16MA macrumors 65816


    Jul 23, 2009
    If there is any truth to this rumor it must be that Apple wants the Beats subscription music service and the headphone hardware comes with the deal.

    That being said wouldn't it be telling if Apple had to spend 3.2b to acquire Beats music? They are a much larger company with more resources and over a decade of experience dealing with record labels.

    There is no reason why Apple should not be able to create it's own Spotify competitor.
  25. unobtainium macrumors 68000

    Mar 27, 2011
    You already can, with iTunes Match.

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