Purchasing Beats: the Most Halfwitted Decision of the Modern Apple Era?

[MICHAELSD]

A few months in, Apple has not convinced me (or hopefully the rest of MacRumors) in the value of Beats. Frankly from this angle it looks like a misinformed waste of $3 billion. Although Apple may and likely will very well recoup it, there is simply nothing proprietary about Beats. Their headphones and technologies are all substandard. They are a design company perpetuated by icons.

If Apple acquired Beats for Beats Music (which was not an original service curated by Beats, but rather an acquisition of an excellent-at-its-time subscription service called MOG), then that is still difficult to justify. For a fraction of the price, a service just as bold and well-constructed such as Rdio should have been brought under Apple.

Is having Jimmy Iovine and Dr. Dre at Apple worth the valuation? No, and it is blatant fragmentation to have a line of products under the Apple umbrella with completely distinct branding -- a company that nonetheless does not know what it wants its identity to be other than one that sells overpriced headphones behind a snazzy marketing and image effort. Iovine brings value, but not a multi-billion-dollar valuation.

Naysayers make a valid point in claiming that Steve would not have gone ahead to waste money and time on acquiring a company that is no more than an image. In my earnest opinion Apple is only cheapening its brand by acquiring a company that is no more an audio technologies company than any other line of headphones backed by a modern celebrity would be.

Has the MacRumors community found value in this decision or is it still one of the most recklessly negligent decisions? Not to discredit the most prolific company in the world as I am sure that they did their due diligence, but all the value that Beats brings could have been accomplished in-house for much less.

 

[kazmac]

@MICHAELSD, I agree with a lot of what you have said and that much money could be used for tech R&D... it was way too much to spend on Beats.

I'll say nothing else for the time being except that as a long time Apple user, I am disappointed in where Apple seems to be heading.

 

[Mr_Brightside_@]

A few months in, Apple has not convinced me (or hopefully the rest of MacRumors) in the value of Beats. Frankly from this angle it looks like a misinformed waste of $3 billion. Although Apple may and likely will very well recoup it, there is simply nothing proprietary about Beats. Their headphones and technologies are all substandard. They are a design company perpetuated by icons.

If Apple acquired Beats for Beats Music (which was not an original service curated by Beats, but rather an acquisition of an excellent-at-its-time subscription service called MOG), then that is still difficult to justify. For a fraction of the price, a service just as bold and well-constructed such as Rdio should have been brought under Apple.

Is having Jimmy Iovine and Dr. Dre at Apple worth the valuation? No, and it is blatant fragmentation to have a line of products under the Apple umbrella with completely distinct branding -- a company that nonetheless does not know what it wants its identity to be other than one that sells overpriced headphones behind a snazzy marketing and image effort. Iovine brings value, but not a multi-billion-dollar valuation.

Naysayers make a valid point in claiming that Steve would not have gone ahead to waste money and time on acquiring a company that is no more than an image. In my earnest opinion Apple is only cheapening its brand by acquiring a company that is no more an audio technologies company than any other line of headphones backed by a modern celebrity would be.

Has the MacRumors community found value in this decision or is it still one of the most recklessly negligent decisions? Not to discredit the most prolific company in the world as I am sure that did their due diligence, but all the value that Beats brings could have been accomplished in-house for much less.

I think your post comes down to this line. Yes, so far Apple has done (seemingly?) little with their acquisition, but I think it's silly to assume big changes would have come in the short term. The bottom line is, more informed minds than ours made the decision, and a lot of people (myself included) have judged Apple harshly for it, but we have yet to see much of Apple's vision for their acquisition. Needless to say, I think Apple's major interest was not in hardware, but services and brand image, and I think that area offers the most potential for them as well (so I laugh when people say 'why didn't they just buy Bose AKG Klipsch Grado Sennheiser etc).

To people who say it wouldn't have happened under Jobs, they may be right, as a recent MR article quoted Iovine saying he's been wanting this for many years (that same article mentions his relationship with Jobs), and Tim has been saying on conference calls for years that they have major acquisitions to make with their cash reserves.

Finally, the new Beats released under Apple (and their wired counterpart) have gotten solid reviews:
http://techcrunch.com/2014/11/20/beats-solo2-wireless-review/
http://www.cnet.com/products/beats-solo2-wireless/
http://www.engadget.com/products/beats-electronics/solo2/
http://headphones.reviewed.com/content/beats-solo2-headphones-review

I don't mean to suggest that this was a direct Apple influence, but I don't think it's a coincidence, either.

 

[Rogifan]

It was a dumb acquisition and just proof that Eddy Cue didn't/doesn't have a clue what to do with iTunes. He and Tim Cook were seduced by a snake oil salesman aka Jimmy Iovine. No way did Apple need to spend $3 billion on music curation.

 

[Mr_Brightside_@]

It was a dumb acquisition and just proof that Eddy Cue didn't/doesn't have a clue what to do with iTunes. He and Tim Cook were seduced by a snake oil salesman aka Jimmy Iovine. No way did Apple need to spend $3 billion on music curation.

Yeah, Iovine sure pulled the wool over their eyes!

 

[MICHAELSD]

I think your post comes down to this line. Yes, so far Apple has done (seemingly?) little with their acquisition, but I think it's silly to assume big changes would have come in the short term. The bottom line is, more informed minds than ours made the decision, and a lot of people (myself included) have judged Apple harshly for it, but we have yet to see much of Apple's vision for their acquisition. Needless to say, I think Apple's major interest was not in hardware, but services and brand image, and I think that area offers the most potential for them as well (so I laugh when people say 'why didn't they just buy Bose AKG Klipsch Grado Sennheiser etc).

To people who say it wouldn't have happened under Jobs, they may be right, as a recent MR article quoted Iovine saying he's been wanting this for many years (that same article mentions his relationship with Jobs), and Tim has been saying on conference calls for years that they have major acquisitions to make with their cash reserves.

Finally, the new Beats released under Apple (and their wired counterpart) have gotten solid reviews:
http://techcrunch.com/2014/11/20/beats-solo2-wireless-review/
http://www.cnet.com/products/beats-solo2-wireless/
http://www.engadget.com/products/beats-electronics/solo2/
http://headphones.reviewed.com/content/beats-solo2-headphones-review

I don't mean to suggest that this was a direct Apple influence, but I don't think it's a coincidence, either.

Sure, Apple had a tighter grip on the quality but if they wanted to be in the headphone space all they had to do was develop a pair of $199-$299 audiophile-grade over-the-head cans. That would have been more profitable, especially if they could sell 10 million pairs a year themselves. Beats are still overpriced, and making decent headphones is not as much a science as they make it sound. Beats is not best-in-class in any form except for in market perception.

That being said the headphones themselves do look appealing and if Apple can bring them up to the quality of other headphones in the price range, I would consider purchasing a pair although would probably end up with Shure or Audio Technica.

Just slap an Apple logo on and you've got Apple HeadPods.

 

[CEmajr]

It's really only been a few months since this deal closed so we've yet to even see what Apple's real purpose of purchasing Beats was. I'm guessing it has more to do with how to revolutionize iTunes Music, which Iovine and Dre seem to be capable of doing according to Apple, moreso than the Beats headphones themselves. But none of us knows for sure.

The great thing about this acquisition is that Beats is far and away the most profitable company in the high end headphone market and unlike some acquisitions (Google's buying Motorola), Beats will quickly and easily make back Apple's $3B plus more. Making it a win for Apple either way.

 

[Scepticalscribe]

Well, I actually think that there are two separate issues here, which may need to be disentangled from one another.

Firstly, then: No, I don't think that this is a 'Half-witted Decision' of any era, let alone the 'Modern Apple Era'. Financially, in fact, it may well make very sound commercial sense.

However, if the question is asked from the perspective of someone seeking decisions informed by the whole idea of design led innovation, the sort of stunning fusion of form and function that used to be the hallmark of the Apple company at its striking best, then, well, the answer would be rather different.

Thus, while I doubt that this decision could be regarded as a 'half-witted decision', I do think that it flies in the face of anything which might seek to be described as startlingly original, new, innovative, striking or indeed, worth emulating from an industrial design perspective.

 

[decafjava]

I have a pair of RHA MA600i and I think they are great, I also picked up a logitech UE miniboom bluetooth speaker which is great for portable sound.

At home I stream from my computer to an old pair of Technics speakers and receiver, and have Logitech computer speakers to boot. All for a lot less than comparable Beats equipment and for equal or better sound quality.

Sound money-making decision. Poor tech future innovation investment.

 

[maflynn]

I think Apple over paid for Beats, which was a mistake, and I fail to see any synergy. What direct benefit does apple receive for absorbing Beats into the fold?

I'm not really seeing anything that will help apple.

 

[Rogifan]

I think Apple over paid for Beats, which was a mistake, and I fail to see any synergy. What direct benefit does apple receive for absorbing Beats into the fold?

I'm not really seeing anything that will help apple.

Well if you listen to Tim Cook and Jimmy Iovine it's "music curation". I think that's BS. I'm sure that's what Iovine sold Apple but there's no way human curation costs $3B. If we don't see major improvements to iTunes in 2015 then I think it's clear this acquisition was a big waste.

 

[itsLouieV]

$3 Billion isn't just for beats music and their headphones, it also prevents beats from ever becoming a competitor and/or adding value to apples competitors. And on top of all that the acquisition was accretive.

 

[Gav2k]

As long as they don't paste a tacky beats logo on the back of the iPhone i really don't care