Apple Reportedly in Talks to Buy Beats, Please Let it Be False

| Analysis

Beats by Apple?Beats by Apple?

Apple is reportedly in talks to buy expensive, but terrible sounding headphone maker Beats. According to London's The Financial Times, Apple is prepared to pay US$3.2 billion for this company, and I, for one, hope that it's nonsense.

Why, you may ask? Beats headphones reinvigorated the high-end headphone market, but it did so with headphones that can turn any music into a muddy romp through a swampy bottom land of mush. I appreciate the former, but I can do without the latter.

In fact, I can't see what Apple would want in this company, let alone what it would be willing to pay $3.2 billion for it. Beats streaming music service? Apple has iTunes Radio. Purchasing the company for that reason would mark the first time Apple used its cash hoard to buy market share.

Beats headphones? Beats has a great brand, despite the poor quality sound that brand produces, but this would mark the first time that Apple purchased a brand it continued to use after the purchase.

The talent pool at Beats? The company makes great looking headphones that are constructed of high quality materials. I love the look and feel of the company's headphones, so much so that I wish they sounded good, but I can't see Apple paying $3.2 billion dollars for the design team behind those headphones, let alone the engineers.

According to The Financial Times, the Beats team would remain intact and report directly to Tim Cook. That would also be a first for shipping products to my knowledge.

Apple's track record for buying companies since Steve Jobs reinvented the company—including Tim Cook's stewardship since Mr. Jobs passed away—is to buy small companies and incorporate that company's technology and/or people into existing projects.

Apple has yet to use its money to buy market share or entry into new markets, and that's what a Beats purchase would be. I'll readily acknowledge that my bias against the sound profile of Beats headphones could be giving me a bias against this acquisition story, but I frankly don't buy it.

I'll also acknowledge that there are hundreds of thousands of people—if not millions—who disagree with me. Beats is a successful brand with ardent fans looking for something different in their headphones than me. That's fine, but $3.2 billion for this particular company—as successful as it is—doesn't compute. If I'm wrong, I'll happily issue a mea culpa.

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Comments

Blissmonkey

It’s difficult to imagine Apple acquiring this brand when it’s fairly broadly understood—just tune into just about any YouTube tech reviewer, for example—that Beats is mainly form and not much substance.

Not much else to say, except that I completely agree with you Bryan, and find it hard to accept that Apple, despite making room in its stores for the brand, could seriously be taking on Beats as its latest and greatest acquisition.

skipaq

That is a way out of line as far as a price for this company. Apple doesn’t need a headphone business. 1B should be more than enough for the streaming business.

Einar Zettergren

Sennheiser would be a better fit. Everything from cheap but still good value-for-money headphones to serious high-end in the >1000 USD range. Plus excellent headphone amps.

John Dingler, artist

Hmmm, hope that the formerly obscure Beats is not to music as Browett was to retail.

I too don’t understand the rationale for purchasing it. Perhaps it contains some super valuable IP or Ive commanded Cook to buy it because it’s his favorite music co.

JonGl

Here’s hoping there’s no mea culpa from you, Bryan! wink

Jules Hobbes

If this is going to happen, then this would be the first time
that I am seriously worried about Apple
since the death of SJ.

gnasher729

Buy Grado for a tiny amount to get some quality headphone technology (best headphones you can buy for a portable device), then ask Jony to do a few weeks of overtime to make them good looking.

ctopher

The radio pundits chopping up this story this morning were all about the streaming music. (on Radio of course!) But they lost credibility with me when they said that Apple’s strategy of emphasizing purchasing over streaming didn’t work! Hello? It didn’t work so well they killed the CD!

OF course now it’s not the young crowds favorite way to find music, so everyone is adapting to the new reality, but Apple WAS the reality 5 years ago!

I think ALL consumer companies are going to have their hands full with this next generation. They’re not interested in cars or cable TV or fancy dinners. Good luck prying out what little cash they can get from their lousy job market.

Joe Kelley

I agree, for most music Beats are a poor choice, but for Hip-Hop, there is nothing better. Beats are obviously designed with that crowd in mind. They build cans that amplify sound specifically in the low frequency range so they will sell well to the same people who put 1000 watt, 12” subwoofers in their cars. Guess what? Winning formula.

ibuck

i suspect Apple’s interest has more to do with the contacts and contracts within the music industry, and the algorithms used in the streaming service, than the headphones Beats sells. And personnel, including Jimmy Iovine to guide Apple in the music arena.

aardman

Could be a mistake.  Could also be that Apple is looking at its iTunes Radio numbers and looking at Beats streaming numbers and saw that the trend in one is not good and the other’s is.

Maybe some of the posters here are, but I’m not going to pretend that I’m a smarter business exec than Tim Cook or Eddie Cue.

Bosco (Brad Hutchings)

Oh, this went down. Dre and Em at Apple HQ, celebrating, I quote, “the first mister falconing billionaire from Hip Hip”. Bryan, what Apple really needs noiw, more than anything is for Em to drop bombs about how they invented the iPhone and Samsung copied them and stole their markets so that Apple could only afford to pay $3B for Beats.

Check it. Beats by Dre. Apple buys Beats. Beats not having nothin to eat.
Story’s the same. Spitting rhymes and designs. For so manny years in obscurity. But what we got is purity. Not futility. You break through the scene and they’re already lining up with copycat utility. Samsung took a selfie with Ellen. What, you couldn’t get a Kardashian? Big Papi couldn’t do it more trashy man? Using the first Hip Hop Prez to cut ads for them? Phone doesn’t fit in your minivan? All the same to me. I feel Gigantic. Glad they want me to speak. Al Gore’s ex-wife is a creep. Peace.

mrmwebmax

+

I don’t see this simply because Beats is a well-known brand, and Apple never buys out well-known brands. Apple is too brand-aware, I think, for this to be true.

PS—Nice rap, Bosco.

Bregalad

You can beat on Beats sound quality if you like, but Apple hasn’t exactly prioritized sound quality in iTunes, iDevices and those ubiquitous white ear buds. Up until the Mastered for iTunes initiative I think it would be fair to say Apple music was aimed squarely at the lowest common denominator.
I still don’t understand why Apple would pay serious money for Beats.

Bryan Chaffin

Those are great points, Bregalad.

Nathan Hillery

I still find it odd that Apple buying Beats appeared as an April Fools day post.  It’s hard to explain Dre’s video, unless he’s reacting to the rumor.

bilbo--baggins

Apple have so far been extremely conservative in their acquisitions.  These rumours about Beats would suggest an acquisition that was on the verve of reckless.  It doesn’t make sense if it was to happen the way it’s being reported.  Perhaps there is some truth behind it - but for this figure etc just does not make sense.

bilbo--baggins

I mean verge not verve!

curlykale

I largely agree with you Bryan; but I feel these iconic headphones, in future with an Apple logo on the ear-flaps will prove super-cool to the young markets
I also assume that the apple team will be able to re-engineer the ‘phones to a better balanced sound.

Also, if they put in sensors for heart and B/P and re-design as an in-ear model. The name “running-beats” ( quick patent this !) might prove irresistible .

Montgomery Gabrys

Hogwash. Beats is doing a new PR and commercial burst and this smells like a classic “viral marketing ploy.

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