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'Beats by Apple' viewed as a culturally compatible corporate marriage

post #1 of 88
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With time to digest Apple's anticipated $3.2 billion acquisition of headphone maker Beats Electronics, industry watchers are beginning to warm up to the idea, seeing a potentially smart strategic move that could broaden Apple's appeal to new markets.


Photo via Paul Stamatiou.


Analyst Steven Milunovich of UBS said in a note to investors on Monday, a copy of which was provided to AppleInsider, that it's somewhat appropriate that the notoriously secretive Apple would surprise the market with its largest-ever acquisition. He said that before investors formulate a strong opinion on the anticipated deal with Beats, he'd like to hear Apple's rationale for the rumored purchase.

At first glance, Milunovich said the rumored $3.2 billion price tag seems reasonable if Beats revenue is about $1.4 billion per year with high margins. He also sees the Beats Music service complementing Apple's "mediocre success" with iTunes Radio, while the headphone designers at Beats could help bolster future Apple products in the wearable devices market.

The analyst said that Apple made a savvy move in the early days of the Mac, earning lifetime users by pushing its presence in schools. In his eyes, the Beats acquisition could do the same for music lovers in a post-iPod era.

"Apple has not promoted the brand of a company it has acquired, but it does have sub-brands: iPod, iPhone, iPad, Mac," Milunovich wrote. "People use the product name knowing Apple makes them. 'Beats by Apple' isn't all that different."


Beats headphones and an Apple iPhone. Photo by M.J. Rodriguez


He noted the appeal of Beats to both young users as well as black Americans, given the strong reputation Beats products carry in those demographics.

Finally, Milunovich is also encouraged by the potential addition of Beats Chief Executive Jimmy Iovine to Apple's corporate roster. The analyst said Iovine's focus on user experience fits within Apple's culture, as compared to competitors who typically focus on horsepower or specifications.

When word broke last week that Apple is allegedly in final discussions to acquire Beats, initial reaction was largely negative, with detractors saying that the purchase of a brand such as Beats doesn't fit within Apple's usual business strategy. Critics also contend that the bass-heavy Beats headphones aren't a quality product built to the standard that they expect from Apple devices.

But the rumored deal has also drawn its share of supporters, specifically those who believe the Beats Music service could be a worthwhile addition to Apple's content offerings. Proponents of the alleged acquisition say that the Beats headphone business could provide an immediate benefit to Apple in terms of high-margin headphones, while the Beats Music service could be a more long-term strategic acquisition.

Brining Iovine on as a senior executive at Apple, along with co-founder Andre "Dr. Dre" Young, are also seen as potential plusses for the iPhone maker. It's been speculated that the two could join Apple as part of a so-called "acqui-hire" agreement that would be part of the $3.2 million buyout.
post #2 of 88

Let's hope -- given that there's already a sub-brand in the current Beats line-up -- that it'll be called iBeats.

post #3 of 88
Quote:
Originally Posted by anantksundaram View Post

Let's hope -- given that there's already a sub-brand in the current Beats line-up -- that it'll be called iBeats.

Oh I see a problem with that ... 1biggrin.gif
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post #4 of 88

Culturally Compatible.  

These two words are made up just to make up a positive impression.

 

I dont feel good about this. 

post #5 of 88
Does Apple normally deny rumours within the first couple of days? If so, this acquisition might very well be true, no matter what the media says or blogs blog.
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post #6 of 88
The headphones are crap- just buy the music service.
Good luck trying to control the music people- especially given they have rap background.
Does this rap influence mean Apple will get their own Air Jordan next- the Apple Jordan?
 
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post #7 of 88

Hopefully it works out... what ever they are getting. I would have thought they  might have bought a provider of some sort in the television world... maybe this is a warm up... get their feet wet. Can't beat them (no pun intended... got lucky), join them.

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post #8 of 88

Beats headphones have everything.  Great styling....a sense of culture.....they're endorsed by celeb's.  What they don't have is great sound.  Very bass heavy with no clear definition on the high end.

Google "beats headphones frequency response graph" and look at the images and it tells the whole story.

Apple better think twice.

post #9 of 88

I'm all out of comments. I've already used them up on all of the previous threads about this subject, and I can't really think of anything else to say about this that I haven't already said.:smokey:

post #10 of 88
Quote:
Originally Posted by PhilBoogie View Post

Does Apple normally deny rumours within the first couple of days? If so, this acquisition might very well be true, no matter what the media says or blogs blog.

And then again, there are obviously those here on AI that think if they state the same objections over and over ad nauseum, Apple will drop the acquisition due to 'high blog-pressure'. Maybe there is a new biometric device coming from the new partnership that addresses that terrible condition. 1biggrin.gif
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post #11 of 88
Apple haven't confirmed yet either.
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post #12 of 88

If Steve were alive this would have never happened...

 

/s

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post #13 of 88
Since we're quoting analyst notes to investors...

http://bgr.com/2014/05/12/apple-beats-acquisition-celebrity-endorsements/
Quote:
"Apple stands to benefit from celebrity endorsements more than it does from a subscription music service or a headphone line, however popular or profitable they may be. Beats brings not only a specific set of endorsements, but also the organizational and cultural know how around endorsements. Anything that helps Apple to better market its products – and improve gross margins – may be worth a premium.”
post #14 of 88
Quote:
Originally Posted by digitalclips View Post

And then again, there are obviously those here on AI that think if they state the same objections over and over ad nauseum, Apple will drop the acquisition due to 'high blog-pressure'.

“Apple buys smaller beats from time to time, that generally doesn't resonate well”

Damn I miss Katie already!
Quote:
Maybe there is a new biometric device coming from the new partnership that addresses that terrible condition. 1biggrin.gif

For that, I'd drop $600 - in a HeartBeat.
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post #15 of 88
Quote: "He noted the appeal of Beats to both young users as well as black Americans, given the strong reputation Beats products carry in those demographics."

I said this very thing in a previous thread about this. Hate to say it and I am sure to get flamed for it but Apple products are viewed as being for upwardly mobile whites. Yes there are more minorities represented more recently in Apple advertisements but for the most part Apple products appear to be targeted to a white market. That's the way of the world (Earth, Wind, and Fire) but time will tell if this really pans out. It is a smart move if that is what Apple is aiming for. Besides, I do like Dre much better than P-Dummy.
post #16 of 88
Quote:
Originally Posted by Chandra69 View Post

Culturally Compatible.  
These two words are made up just to make up a positive impression.

I dont feel good about this. 
This headline gave me a good chuckle. Spin at its finest. If AI had put up a poll a week or month ago asking members what company/technology Apple should buy/invest in no way would Beats been near the top, or even made the list for that matter. Now that it's a real possibility AI needs to try and put a positive spin on it. lol.gif
post #17 of 88
Quote:
Originally Posted by Rogifan View Post

Since we're quoting analyst notes to investors...

Don't forget sites that confirm this acquisition, 13 hours ago!

http://www.startupsmart.com.au/technology/five-reasons-why-apple-has-bought-headphone-company-beats-by-dr-dre/2014051212262.html

"Five reasons why Apple has bought headphone company Beats (by Dr Dre)"

Maybe they did it because they have such a classy and colourful headphone?

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post #18 of 88
Quote:
Originally Posted by macxpress View Post
 

If Steve were alive this would have never happened...

 

/s

How can you say?  

If you tell the samething to Cook, he would reply... "Steve asked us to not to think what would Steve do."  

So, Tim had listened to his inner voice and went ahead. :D

 

// I love Tim, by the way.  He is the best one for Apple now. No doubt.

post #19 of 88
Just watched Iovine's D interview with Mossberg, I'm totally sold. I have never listened to a pair of Beats as I fancy the classics from Grado, Koss and Sony so I assumed the beats were always a marketing thing and probably had generic bass boasting drivers. I don't care about Beats headphones or hardware, it's Iovine's vision for software to assist the listener, the comfort in knowing the next song is great for the occasion all the time every time. Great acquisition Apple, fair price too.
post #20 of 88
Quote:
Originally Posted by Rogifan View Post

This headline gave me a good chuckle. Spin at its finest. If AI had put up a poll a week or month ago asking members what company/technology Apple should buy/invest in no way would Beats been near the top, or even made the list for that matter. Now that it's a real possibility AI needs to try and put a positive spin on it. lol.gif

Boy if it turns out there is something none of us knew about and it is a huge success down the line, there is going to be a lot of eating crow around here ... yes we keep records ... The Dvorak Hall of Fame Shame Award could be up for votes. 1biggrin.gif
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post #21 of 88

The Music service is crap too.  I'm already finding that they don't have the selection of Rdio and I suspect Spotify.   Their mobile app may be slick but there web app is clumsy and difficult to use and they don't have the pricing options that the others have.

post #22 of 88
Quote:
Originally Posted by Chandra69 View Post
 

How can you say?  

If you tell the samething to Cook, he would reply... "Steve asked us to not to think what would Steve do."  

So, Tim had listened to his inner voice and went ahead. :D

 

// I love Tim, by the way.  He is the best one for Apple now. No doubt.

 

I think you missed the /s part LOL

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post #23 of 88
Quote:
Originally Posted by pazuzu View Post

The headphones are crap- just buy the music service.
Good luck trying to control the music people- especially given they have rap background.
Does this rap influence mean Apple will get their own Air Jordan next- the Apple Jordan?

May be, Apple needs these headphones to bury in their sensors and all etc.  And, Beats is already established brands... why would Apple reinvent?  So, went with this deal. But I dont like this. :D

post #24 of 88
Quote:
Originally Posted by pazuzu View Post

The headphones are crap- 

I'll repost something that I posted on the other Beats-story-du-heure:

-----

Oh, enough with this silly headphone snobbery. It would be just tiresome if it weren't so laughably off.

 

Regardless of what you think or say, with lossy AAC/MP3 files, having a great versus a mediocre headphone just gets you.... mediocre sound. (As to the bass-heavy critique -- that others have brought up -- I wish people would just change the equalizer preset and stop the whining).

post #25 of 88
Quote:
Originally Posted by pazuzu View Post

The headphones are crap- just buy the music service.
Good luck trying to control the music people- especially given they have rap background.
Does this rap influence mean Apple will get their own Air Jordan next- the Apple Jordan?

 

Dripping with prejudice and bigotry.  Disgusting.

post #26 of 88
Quote:
Originally Posted by sapporobabyrtrns View Post

Quote: "He noted the appeal of Beats to both young users as well as black Americans, given the strong reputation Beats products carry in those demographics."

I said this very thing in a previous thread about this. Hate to say it and I am sure to get flamed for it but Apple products are viewed as being for upwardly mobile whites. Yes there are more minorities represented more recently in Apple advertisements but for the most part Apple products appear to be targeted to a white market. That's the way of the world (Earth, Wind, and Fire) but time will tell if this really pans out. It is a smart move if that is what Apple is aiming for. Besides, I do like Dre much better than P-Dummy.
I suppose then Apple needs to make a super cheap iPhone too. And iPad and Macs. So they can capture the non upwardly mobile market.
post #27 of 88
Quote:
Originally Posted by PhilBoogie View Post

Don't forget sites that confirm this acquisition, 13 hours ago!

http://www.startupsmart.com.au/technology/five-reasons-why-apple-has-bought-headphone-company-beats-by-dr-dre/2014051212262.html

"Five reasons why Apple has bought headphone company Beats (by Dr Dre)"

Maybe they did it because they have such a classy and colourful headphone?


No .... It's so Apple can patent wearing a baseball cap backwards, .. $3.2 B ... it's a steal! CREATOR: gd-jpeg v1.0 (using IJG JPEG v62), quality = 90
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post #28 of 88
Quote:
Originally Posted by Rogifan View Post


I suppose then Apple needs to make a super cheap iPhone too. And iPad and Macs. So they can capture the non upwardly mobile market.

Maybe...

post #29 of 88
Quote:
Originally Posted by anantksundaram View Post
 

Let's hope -- given that there's already a sub-brand in the current Beats line-up -- that it'll be called iBeats.

 

Who would possibly be the celebrity endorser for that line..? I hesitate to ask...

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #30 of 88

The brand has a widespread reputation. The music side has a lot of users and makes money and the hardware side is making a lot of cash selling cheaply made, poor sounding headphones. Apple don't make the greatest earphones so maybe Apple will set to the design and actually improve the Beats headphones and make their own in ear "earpods" better too.

 

Beats needs less bass and earpods need more bass. There must be a good middle ground.

post #31 of 88
Quote:
Originally Posted by digitalclips View Post

No .... It's so Apple can patent wearing a baseball cap backwards, .. $3.2 B ... it's a steal!

Think I'll check out on this whole acqui-rumour. Had some laughs, and read insightful views from many posters - for that: thanks. Will Apple buy them: Beats me.
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post #32 of 88
Quote:
Originally Posted by digitalclips View Post

Boy if it turns out there is something none of us knew about and it is a huge success down the line, there is going to be a lot of eating crow around here ... yes we keep records ... The Dvorak Hall of Fame Shame Award could be up for votes. 1biggrin.gif
I've already said I'm willing to eat crow if I'm wrong about all this. I just find this particular headline and article amusing. 1biggrin.gif
post #33 of 88

In other words: 'I am as confused about this as you are, but I know Apple isn't dumb so I'll try to find a positive explanation for this rumoured seemingly nonsensical acquisition.'

 

Myself I would rather Apple had used that 3.2B to buy Twitter 2 or 3 years ago. Or one third of it to buy Instagram and bundling the network into every iPhone as part of the Photos app package. But especially Twitter. If there was ever a social network that fit Apple it would be Twitter. You could argue that they didn't need Twitter, but Ping was an effort on Apple's part to build a social network. Rather than bother trying to build one they could have simply bought the best one. And they could use their huge hardware profits to further improve Twitter, giving users a better UI with better developer support and a more refined experience. And one of those two big social networks built into every iPhone would be from Apple now. That'd be a huge deal I think.

 

I just don't get this Beats acquisition. Let's see what Cook has to say on the matter.

Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #34 of 88
Quote:
Originally Posted by SpamSandwich View Post

Who would possibly be the celebrity endorser for that line..? I hesitate to ask...
Using the letter I next to Beats is probably not good marketing. Although Apple's latest iPhone commercial uses a song that's about big penises so I guess anything is possible. 1wink.gif
post #35 of 88
Quote:
Originally Posted by SpamSandwich View Post
 
Quote:
Originally Posted by anantksundaram View Post
 

Let's hope -- given that there's already a sub-brand in the current Beats line-up -- that it'll be called iBeats.

 

Who would possibly be the celebrity endorser for that line..? I hesitate to ask...

http://bit.ly/1lC5a09

post #36 of 88
I guess we will see where this shakes out soon enough. Can't blame Dre though. I would sell to Apple too for that kind of cash. Whatever happens it will be interesting.
post #37 of 88
Quote:
Originally Posted by sapporobabyrtrns View Post

Quote: "He noted the appeal of Beats to both young users as well as black Americans, given the strong reputation Beats products carry in those demographics."

I said this very thing in a previous thread about this. Hate to say it and I am sure to get flamed for it but Apple products are viewed as being for upwardly mobile whites. Yes there are more minorities represented more recently in Apple advertisements but for the most part Apple products appear to be targeted to a white market. That's the way of the world (Earth, Wind, and Fire) but time will tell if this really pans out. It is a smart move if that is what Apple is aiming for. Besides, I do like Dre much better than P-Dummy.

 

In the music, audio production world Mac's are it and have been from the very beginning, for anyone doing music or audio production of any type. With companies like Algoriddim iPads/iPhone are being use by a wide range of people. Apple's iOS ecosystem is where the best mobile audio apps are, the competition? there is none Android has a sight problem with audio latency and profit for the developers.

 

http://www.algoriddim.com

 

http://www.algoriddim.com/hardware

 

PS Algoriddim would be great company to pick up, but on the hand you can't own everything nor should you.


Edited by Danox - 5/12/14 at 12:53pm
post #38 of 88
Quote:
Originally Posted by PhilBoogie View Post

Does Apple normally deny rumours within the first couple of days? If so, this acquisition might very well be true, no matter what the media says or blogs blog.

Apple doesn't comment on rumors. And they shouldn't either.
Quote:
Originally Posted by Rogifan View Post

Since we're quoting analyst notes to investors...

http://bgr.com/2014/05/12/apple-beats-acquisition-celebrity-endorsements/

Apple doesn't pay people to use its products (product placement is different). Celebs already use Apple products prior to advertising celebs with the idevices.
post #39 of 88

Wow, that's a particularly close-minded comment. 

"Good luck trying to control the music people- especially given they have rap background."

post #40 of 88
Quote:
Originally Posted by pazuzu View Post

The headphones are crap- just buy the music service.
Good luck trying to control the music people- especially given they have rap background.
Does this rap influence mean Apple will get their own Air Jordan next- the Apple Jordan?


Wow.  Tell me more about people with a "rap background."

You do understand the difference between entertainment and business or does that confuse you?

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