Apple no longer Marching to its own Beat(s)

by Matt Klassen on May 12, 2014

For years Apple has marched to the beat of its own drum, preferring to dictate market trends rather than follow any path that others might have blazed. Its for this reason that Apple has traditionally shied away from landmark acquisitions, choosing instead to focus its energies on establishing its own brand, bringing in smaller start-up technologies to help augment its own in-house products and ideas. So you’ll have to excuse me for being staggered by a report from the Financial Times late last week that the Cupertino tech giant is in acquisition talks with high-end headphone maker and audio content provider Beats Electronics.

In a deal reportedly worth $3.2 billion, Apple is said to be courting Beats, a company founded by rapper Dr. Dre and long-time music industry executive Jimmy Iovine in 2008. Known largely for its top selling high-end headphones, which boast bass boosting awesomeness, Beats also dabbles in the streaming music market, offering an on-demand listening service for $10/month.

While no doubt a competitor with Apple in both markets, the Cupertino company offering its own Apple branded headphones and, of course, iTunes and iRadio, its remains unclear, however, why Apple would be interested in Beats for exactly these reasons, leading me to believe that either Apple must have some ingenious plan in place, or that Apple is simply no longer the company it once was.

Now granted Apple offers its own branded headphones as part of its accessories package for the iPhone, iPad, and, yes, iPod, but lets be honest, Apple’s headphones are terrible. Perhaps that’s the reason Apple is courting Beats, hoping to secure a piece of the North American headphone market, a billion dollar sector of which Beats currently controls 60 percent.

But if Apple wanted to make its own high-end the company has more than enough resources to create, brand, and market its own products that would, most likely, eliminate any need to compete with Beats and would cost the company considerably less to develop such a product in-house than it would to acquire it.

The other alternative seems to be that Apple might want to acquire Beats unique take on streaming music, its flat rate streaming on-demand service. But again, if that’s something Apple was truly interested in I doubt it would be that difficult to manufacture something of its. In fact, a few tweaks to iRadio or iTunes might do it.

Finally there’s the rumour that Apple is looking to bring Beats’ Iovine on board to head up its iTunes division, giving its music services a much needed makeover. But if that’s the case, $3.2 billion seems a might steep for poaching Beats’ executive talent.

For years Apple’s acquisition modus operandi has been to purposely stay away from large acquisitions such as this, preferring instead to scoop up start-ups and incorporate fledgling technology (i.e. Siri) into the company’s already strong brand.

Apple has always shied away from such landmark deals, choosing to march to it’s own beat when it came to establishing a market presence, and its becoming somewhat of a head-scratcher why Apple would make the biggest acquisition deal in its history to eliminate a relatively minor competitor. Add to that the seeming redundancy of products and services between the two companies and many are wondering what Apple really has in mind.

To abandon such a strategy for a company like Beats seems to almost defy logic, at least on the face of it, as its far too much money to spend on eliminating a minor competitor and given the seeming redundancy of products and services between the two companies I’m left to draw one of two conclusions: 1) Apple, being Apple, has some clandestine plan that involves an established player in the music business, perhaps something to do with wearables, or 2) Apple simply isn’t Apple anymore.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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