Dr. Dre Appears to Confirm Apple-Beats Deal in Facebook Video
thenextweb.com
thenextweb.com
I actually think this is a smart move. Beats first and foremost is a fashion company. The majority don't buy Beats for sound quality, but for the style and image. I see people wearing Beats in all sorts of colors every day on the train. NBA players are seen sporting them at practice or in the locker room. It has become the fashion icon for audio-wear. In the context of Apple's recent fashion-binge with hires from Burberry and YSL, this move may provide further evidence of Apple creating/entering the wearable-tech fashion market.
This could also be a response to Apple losing ground in music streaming. Rdio, Spotify have become the default source of music for so many, I wouldn't be surprised if Apple has seen a hit to their music sales. They also botched social music up with Ping, which is an area the aforementioned services are doing pretty well in. Beats may have the connections, the brand and marketing capital, to help make Apple a formidable competitor in this area. But I read here yesterday that the Beats streaming service only has 200,000 low-quality subscribers (ie they joined because their phones came preloaded with the service), so I'm less inclined to believe Apple dropped 3.2 billion on them for this alone.
Maybe it's a combination of both, or for a different reason altogether. It's intriguing, nonetheless.
This is the key. I would add it isn't just a fashion company, it is a _premium_ fashion company. I did a quick look at Amazon [1], and the price points are fairly solid: $99 to $299 for over-the-ear headphones, and around $45 for the in-ear models.
I doubt Apple could get away with this level of mark-up if they entered the headphone space. They have a solid markup on their accessaries, but I doubt the margins are similar.
Taking a step back, I wonder what Angela Ahrendts [2] is going to do with this brand. Is the beats brand part of their iWatch strategy?
[1] http://www.amazon.com/s/ref=nb_sb_ss_i_0_5?url=search-alias%...
Paul Deneve[1] (ex-YSL CEO) might do something with it.
[1] http://www.businessweek.com/articles/2013-07-03/apple-hires-...
Maybe, but that is sort of like saying Phil Schiller is _just_ going to market them. I always remember this post from Daring Fireball about how integrated Apple is:
Angela Ahrendts (Burberry) was hired for retail and online store management. You might be onto something with Paul Deneve (YSL) though.
It's hard to see Beats justifying a $3.2bn valuation without a significant part of that being the value of the brand which suggests that's part of what Apple will be interested in. If that is true is there any precedent for Apple making a significant effort to sell non-Apple branded goods?
I could see it, Beats are a primarily aspirational product (anyone serious about music will tell you (at length)) that Beats are mediocre at best (even excluding the markup).
I could also see a Beats "FitBit style" device working well in partnership with an iPhone.
I've seen this sentiment a few times and find it fascinating. We find it justifiable for Facebook to spend $19bn on a messaging app with very little revenue yet I read Beats will make around $1bn in revenue this year (+ they have huge margins) and $3bn is difficult to justify.
I did read the entire thing. I don't think the brand matters too much, my point was the profit they're making justifies the price regardless of the brand. And my point was address not specifically to the parent but to the point that the valuation can't be justified which I've seen in several places hence my first sentence: "I've seen this sentiment a few times".
Here I think the question is what the value of Beats is to Apple. Last year Apple's revenue was £170bn so I don't think they're looking at Beats to give them an extra 0.5%.
Of course the other side of that is with Apple's cash pile being what it is there is almost no financial risk to the acquisition so how much justification does it need?
This isn't about Apple being smart or stupid. It's not about whether this deal makes sense monetarily.
It's about values. Apple has always trumpeted the kind of values that don't require having a PhD or the nose of an experienced businessman to judge. It's about great products, they say. Excellence in everything from the design, to the ads, the packaging, materials, hardware, software and even the stores where all this is being sold.
The reason people believed Apple has those values was that in no way anything Apple ever did either publicly or privately has ever shown any mismatch with their marketing message before.
And we'd hear the stories of Jobs crying when watching the Think Different ad. We'd know that even if you may think what these folks say is bullshit, at least they honestly believed their own bullshit.
And the confusion now is because people look at Apple + Beats, and they don't see how the sum improves on any of the goals Apple has repeatedly declared they care about. You can explain various accidents like the iPhone 4 antenna and so on as accidents, no one is perfect, but this is no accident. It's a deliberate action that makes no sense for the Apple we used to know before.
Maybe Tim Cook would like to explain why Apple + Beats makes sense. It worked when Apple shipped Macs with IE and had to accept investment from Microsoft in the 90s. And the explanation made sense.
However if we hear the typical corporate bullshit about synergy and how together they're greater and what not, without being able to explain why would this result in better products, there'll be a lot of disenfranchised Apple supporters, I can tell you that.
People in the tech community, and Hacker News more specifically, are having a hard time grasping this deal because they still see Apple's roots as a niche tech company of superior quality, whereas they've long moved to a mass market company. For a long time Apple was seen in a similar light as Beats; they charged a premium for commoditized product (personal computers with operating systems) and were heavily driven by marketing. Wether Hacker News wants to accept it or not, they're both predominantly mass market fashionable hardware companies that charge a premium for their ostensibly superior products. Beats has created a justifiably large brand, whether techies want to accept that fact or not.
On top of that, I assume that Samsung's announcement just last week that they're entering the "premium mobile audio" space had a lot of influence on Apple doing this deal. So far this seems to be overlooked by most pundits.
I understand why Beats are popular. They sound great with bass driven music. Its like when people put Bazooka sub woofers in their cars in the 90s. Yeah audiophiles and older people hated them but they sounded great with bass driven hip hop.
I still haven't figured out Apples play here. I'm starting to think its a best of both worlds with the earphone tech and the subscription services. I think they wanted them both equally hence the huge number.
Apple has a chokehold on the iPod market. They've rocked the market with the iPod, iPhone, iPad and those products will be cash cows for a long time. But where is their next growth going to come from? A watch? I doubt it.
All the granola 16-year-old white girls already have their iPhone. There's no room for crazy growth among middle class white people. Apple needs to use it's expertise to pursue new markets, which is exactly what they're doing.
Tim Cook isn't afraid, he's strategic. Beats by Dre is a high-end consumer lifestyle brand that GREATLY appeals to black, hispanic, urban-context, young men and women. They sell expensive products. They care about design. They represent a way of living. They're Apple in another market.
Beats is about to be Apple's international foray into a completely new growth segment. And it's genius.
Probably makes it more likely to be happening.
If true, this makes sense framed as an acquihire.
$3.2bn to bring in Dre, a music industry genius and Jimmy Iovine, a highly influential label boss. iTunes is at risk of aging - kids' parents use it. It may be that Apple recognises the need for a brand for a younger, cooler audience who don't want to buy an MP3 file. Apple has the money but pulling labels (and artists) over to a viable subscription business model is going to take clout, influence and reputation.
I expect Dre will shortly be rapping about his unforgettable journey.
[1] http://www.theguardian.com/business/2011/jan/11/50-cent-ramp...
An angle I didn't originally think about, but I think this is a big one. Apple has seen how Facebook has aged, and may be trying to avoid the same thing.
Is all this really just for the name?
However, the response is pretty neutral. I'd imagine the Beats acquisition is probably at least in part to make better headphones. I don't know if Beats' streaming licenses are transferrable.
2. And aren't streaming rights only good for a few years anyway?
Since other products are all about the audio experience, it does seem strange that the iPod, the device which most of humanity uses to experience music, does such a poor job. And Apple doesn't care. And neither do the people listening. Strange.
I thought that was for making facetime and skype etc work well though? Musicians are not using the built-in audio interface, regardless of quality considerations, it lacks the necessary functionality.
Everyone I know has a sub $100 USB interface hanging off their machine and swears constantly at the latency and wishes they'd just stuck with ASIO on Windows...
Personally I still have a workstation...
As for the iPods they sound horrible. The latest line of nano has noticeable noise on the outputs.
USB interfaces are a terrible idea - they are polled and add latency every time.
You're complaining about WDM audio. There's built in WaveRT and external ASIO stacks as well. The latter has become the standard on Windows for professional audio and is direct hardware access.
USB audio devices are and aren't polled. The cheap ass speakers and stuff are but anything $20+ are buffered raw device access.
I can get 8ms out of a Windows 7 laptop with ASIO over USB that isn't even tuned. My Korg Triton Studio manages about 4ms and that's seriously high end kit.
WaveRT is what WDM uses, right? With the associated delays going user/kernel mode. How does that help?
And USB devices are polled, at three levels as I recall - 'control', 'interrupt' including 'isochronous' and 'bulk transfer'. The frame interval depends on the USB speed - and I see they are sub-millisecond. SO very adequate for audio sampling. I used to use it for serial protocols, and that frame rate was entirely inadequate for signalling so I formed my low opinion of USB at that time.
Exactly.