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

[CelestialToys]

I have been a avid reader of macrumors for years never commented on anything I read until today (never felt strongly about anything on here as I do about this) these negative comments about beats are mind boggling to me thats like saying Apple is not the best when they clearly are or that Nike isn't the best at sneakers or that Google isn't the best thing on the internet. Until people stop denying greatness we will never be as great as we could be !!!!!

Evidently your definition of best is based on sales figures and celebrity endorsements , that doesn't make something the best in my book.

Beats products do not compare favourably against other cheaper less fashionable brands of headphones in audio quality or manufacturing durability.
You can buy headphones which sound better and last longer for considerably less money.
Now headphones from manufacturers such as Audio technica, Grado, AKG, and Beyer dynamic may not have the "street cred" associated with beats but hands down sound quality and build quality on these companies $100 cans are far superior to the very top of the range beats cans.

Now I've got nothing against greatness, and beats have done a great job of convincing a lot of people to pay over the top prices for a middle of the road product, but it's all in the marketing not the product.

 

[inplainview]

Beats by Dre doesn't grab 51% of the headphone market by making bad products. They are the best headphones design wise and quality wise PERIOD. Everyone on here that has something negative to say about this deal is really mad at the fact that there giving a blk guy a billion dollars and that a blk guy is making the best headphones on the market. Beats by Dre came in and changed the headphone game forever the same way apple did with the Iphone. This is a great acquisition and a tremendous deal for both Apple and Beats and just goes to show why apple will be the number one company to ever exist in the near future. (the world is changing folks get rid of the hate from your heart it will only lead to hate in the world)

Your statement about Beats being the best is by far the dumbest thing I have heard (no pun intended) to date. It is quite apparent your listening has been done on 30 dollar headphones. Get yourself a pair of Shure SE-846's, custom molded ear inserts, and a Sony PHA-1 personal amplifier and then come back and tell us how Beats are the best headphones out there. I have demoed them and they are rubbish. Typical bass coloration and muddled bottom end. They are designed for people who don't know better and are easily fooled. In short, you have no clue what you are talking about. See what a real sound experience looks like.

 

[djransom]

Songza and Spitify destroy Beats and iTunea.

Spotify definitely doesn't Beats music service.

 

[cfountain72]

I'd like to second a previous poster who...

...said that it looks like all that money is burning a hole in Apple's pockets. If they really wanted Jimmy Iovine as a 'special advisor', seems they could've hired him for so much less than $3.2B. Do they have specific manufacturing expertise that is unique to Beats? Or is it simply the ability to sell $20 (cost) headphones for ~$300 (retail)? Maybe they need an 'insider' to handle the myriad record contracts that they have to deal with? Then again, maybe they could just buy the company, reap some of the profits, the audio experience, and alleged 'brand coolness', and then sell it a few years down the road?

Otherwise, buying 'cool' isn't very 'cool' at all.

 

[BaldiMac]

What makes you think they will use the Cash to fund this acquisition. They will almost certainly go to the market to borrow the money because they will never repatriate that cash because it immediately becomes liable to taxes in the US.

One third of Apple's cash is in the US, so they have plenty of cash to complete a $3 billion acquisition without borrowing money.

 

[tdar]

Makes no sense. What can beats do for Apple ...... NOTHING!!!
Price makes no sense and from what I'm reading on papers , media sites etc nobody seems to be in favor of this

It only makes no sense if your thinking is only what's on the surface.

Could Apple make headphones and speakers- Sure. Would they be very successful and maybe take some of that beats share away- Sure.
Could Apple make their own subscription service- Sure. Would they have a successful service almost out of the box-Sure.
SO none of that is what this is really about.

If you want to start a subscription service, we all know what you really want to offer. How about this: "If it's in iTunes, it's on your phone-But only if your phone, is a iPhone."

What if Jimmy can make that happen? What if it can't happen with out him?

What if he can make that happen AND you get the existing 1B$ a year they bring in, giving you a 3 year payback.
Now does it make sense?

 

[jonnyb098]

So you joined MacRumors today, your name implies that you are under the influence, and you are implying that questions around the acquisition are race related.

It's common knowledge that Beats is not the most impressive company for audio quality or technology, however is a marketing powerhouse which has led to it's impressive market share. There hasn't been a single company prior to Beats to make wearing a specifically branded and recognizable set of headphones fashionable. No other headphone manufacture has used product placement or celebrity endorsement like Beats. No other headphone manufacturer has had consistent national on-air TV advertising. The audio quality of the headphones themselves are mid-tier, but the marketing (and product design from a fashion perspective) is top-notch.

Like someone mentioned earlier though. I think this goes deeper than just headphones, but may have to do with licensing deals with Interscope. Although, 1 billion in annual revenue is definitely very impressive.

Are you forgetting Apple earbuds became iconic and have been for 13 years now? How was beats first?

 

[Rogifan]

This basically affirms every negative stereotype about Apple. Why would Cook want to do that?

 

[IJ Reilly]

What makes you think they will use the Cash to fund this acquisition. They will almost certainly go to the market to borrow the money because they will never repatriate that cash because it immediately becomes liable to taxes in the US.

Because Apple's free cash flow is around $1.5B per week. They will almost certainly not borrow the acquisition costs, but even if they did, it makes little difference.

You also cannot say that Apple will never repatriate their overseas retained earnings. Leaving cash idle essentially forever because using it would incur taxes is poor business practice.

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This basically affirms every negative stereotype about Apple. Why would Cook want to do that?

I don't follow you.

 

[CJM]

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.

See, I thought that was Apple's philosophy. It's why I've stuck with them all these years. If it goes this way I will end up jumping ship.

 

[jonnyb098]

Seriously, there are so many dopes on here complaining about headphones. THEY DIDNT BUY BEATS FOR 3.2B FOR THEIR CRUMMY HEADPHONES.

They bought them for the streaming radio service that will be part of iOS 8. They will use the backend, then dress it up pretty and launch an all new iTunes Radio App.

 

[gnasher729]

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.

Just my thoughts about "Beats haters" and what would make someone a "hater". We obviously have lots of Apple, iPhone, iPad, Android, Google and Samsung haters on these forums, but I don't think we have Beats _haters_ here.

I don't think Beats has done anything to deserve "hate". There is dislike. If you asked me for headphone purchase advice and you suggested Beats headphones, I'd say "it's your money, but I'd buy something else for the same money and get lot better sound quality". But if I watched a stranger in a shop buying Beats headphones, I wouldn't run towards them and scream "evil, evil, evil!" (Well, I wouldn't if you bought a Samsung phone either, but you know what I mean).

So I wonder what kind of attitude would make someone a "Beats hater"? Let's say if Google came up and bought Beats for $4bn, I'd be happy because Apple doesn't waste $3bn. A Beats hater would surely be unhappy with this?

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Seriously, there are so many dopes on here complaining about headphones. THEY DIDNT BUY BEATS FOR 3.2B FOR THEIR CRUMMY HEADPHONES.

They bought them for the streaming radio service that will be part of iOS 8. They will use the backend, then dress it up pretty and launch an all new iTunes Radio App.

You use the past tense here. So far this is just a rumour.

 

[Mycoolroy]

wow... ew.

 

[scott911]

Iovine's a smart guy.

He must knows how bad Beats headphones are, in fact - they are "bad" by careful design.

But he gave the public exactly what they wanted, didn't he?

 

[dazz87]

Rumors has it that Apple is going after Monster cable and Bose next.....

 

[Four oF NINE]

I don't understand this deal at all.

 

[charlituna]

Maybe Apple is paying them off to kill the service and yank the headphones out of stores (ie, pay off some contract to give them shelf space since they are a high theft item and not making Apple any money)

 

[Rogifan]

I don't follow you.

The negative stereotypes about Apple are that their products are overpriced. That you're paying more for inferior technology. That you're paying for the shiny Apple logo, for the slick design, marketing, packaging, etc. I'm not saying I agree but that stereotype is out there. Buying Beats does nothing but amplify that perception. Go to any tech site and you'll see comments about how this fits in perfectly with Apple's business model (selling overpriced hardware). I'm trying to understand why Apple sees a future in selling crappy headphones for huge markup. If Apple really wanted to improve the quality of the audio in their products buying Beats isn't the way to do it.

But maybe this isn't about the headphones or Beats brand, maybe this is Apple signaling that Eddy Cue has too much on his plate or isn't capable of taking iTunes where it needs to go.

 

[zephonic]

Looks like Dr.Dre is already celebrating!

http://youtu.be/s2e5ZibypDk


The deal would make sense for Apple because of Beats streaming music services, apparently. Jimmy Iovine is a BIG player in the music industry and no doubt has deals in place that may be very attractive to Apple.

 

[Zerilos]

The negative stereotypes about Apple are that their products are overpriced. That you're paying more for inferior technology. That you're paying for the shiny Apple logo, for the slick design, marketing, packaging, etc. I'm not saying I agree but that stereotype is out there. Buying Beats does nothing but amplify that perception. Go to any tech site and you'll see comments about how this fits in perfectly with Apple's business model (selling overpriced hardware). I'm trying to understand why Apple sees a future in selling crappy headphones for huge markup. If Apple really wanted to improve the quality of the audio in their products buying Beats isn't the way to do it.

But maybe this isn't about the headphones or Beats brand, maybe this is Apple signaling that Eddy Cue has too much on his plate or isn't capable of taking iTunes where it needs to go.

Just to be clearly, and as every analyst is pointing out (except for Munster who is an idiot IMHO), this is not about headphones. It's about media distribution and expanding sales onto other ecosystems.

I'm not suggesting it's a good idea, I'm just amazed how uninformed most of the commenters here on MR are.

 

[nascimento]

NO please dont

Please let it not be so.

The only thing I think about when I see someone with one of those ridiculous garish colored headphone on the head is...What a retard and at best what an idiot. (hope i dont offend anyone!)

Apple is the BMW of the computers and beats is the most uncool thing apple could buy

 

[jeffe]

I'm guessing they want it for the music streaming service.

Sure Apple could build there own music streaming service but do we know how long that would take?

 

[Zerilos]

Please let it not be so.

The only thing I think about when I see someone with one of those ridiculous garish colored headphone on the head is...What a retard and at best what an idiot. (hope i dont offend anyone!)

Apple is the BMW of the computers and beats is the most uncool thing apple could buy

Just an FYI...Apple has been selling Beats headphones for years at Apple Stores.

 

[Zxxv]

new iStoreWarsEpisode2Beats headphone leaked

 

[Zerilos]

Maybe Apple is paying them off to kill the service and yank the headphones out of stores (ie, pay off some contract to give them shelf space since they are a high theft item and not making Apple any money)

I assume this was meant as a joke.