The Facts
* Apple has previously only ever purchased startups with valuable IP
or the patent portfolios of bankrupt giants.
* Beats will be Apples largest ever acquisition
by far.
* Beats has little or no IP that would be of value to Apple
apart from its brand.
* Apple has been bleeding market share
almost exclusively at the youth/budget end of the market.
* Apples recent attempt to address this (the iPhone 5c) was a complete flop. Largely because of Apples unwillingness to tarnish their reputation with a genuinely budget product. And because, Apples loyal customers were only interested in a premium product
the iPhone 5s.
My Speculation
* Apple will adopt a Toyota/Lexus marketing strategy. With Apple being Lexus
and Beats being Toyota.
* An Apple owned Beats will market its own smartphones and tablets - aimed at the youth and budget markets. These devices will use iOS and Apple services
iTunes, App Store and iCloud (the Apple eco-system).
* These devices will have their own distinct (non-Apple) design aesthetic
and will be lower spec (and cost) than the Apple range
but they will be cool
very, very cool. Apples know-how and production muscle will ensure that these phones stack up extremely well against the Android opposition.
* Of course Apple could start their own youth brand (and keep the $3.2 billion). However, history is littered with failures of such attempts. Beats has established a very successful youth brand.
* Beats devices will lure (tens of) millions of young customers away from Android devices
and into the Apple fold. When these customers turn 30
and want a grown-up smartphone/tablet
the will be locked into the Apple eco-system
and buy an iPhone 11s.
* It makes sense that Apples largest ever acquisition will be used to fight Apples biggest ever battle - against Google, Android, Samsung et al.