Wall Street warming up to $3B Apple-Beats deal, sees potential to offset declining iTunes revenue

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Comments

  • Reply 41 of 95
    island hermitisland hermit Posts: 6,217member
    Quote:

    Originally Posted by anantksundaram View Post

     

    It's more likely that you (and the other tiresome naysayers here) refuse to understand because you don't agree.

     

    The overwhelming reaction from analysts, financial media, financial commentators, and talking heads to the deal when it was first announced (as a rumor by the Financial Times) was negative. (For the record, I was quite negative about it too -- you're welcome to go back and check my posts.) Apple's stock price fell by much more than the market's did when this rumor came out.

     

    Look at the reaction of both the analysts and the market today.

     

    I think you guys are totally blinded by your hissy-fits.


     

    Just a side note...

     

    Just because you and the analysts are warming to the deal doesn't mean that it is a good deal. Only time will tell that.

     

    This is a site for opinions. It's more likely that you refuse to understand because you don't agree. 

  • Reply 42 of 95
    flaneurflaneur Posts: 4,495member
    I think this will be a good long term acquisition because I don't just see this as an acquisition of a music streaming service, a couple of faces with credibility and contacts in the industry, or a ploy to build an image among the black community, but rather I think that the production potential is enormous.  Apple has already launched A-list performers' albums exclusively on iTunes and iTunes has given a tremendous amount of smaller, independent performers a venue to market their music.  Why not take it to the next logical level; groom and produce this new talent and sign them to an iTunes or Beats label?  This would allow Apple to cut out the middle man (the record company) and offer more royalties to the performer and at the same time pocket their 30% plus a bit more.

    Very interesting idea. Maybe the whole idea behind this.
  • Reply 43 of 95
    SpamSandwichSpamSandwich Posts: 30,581member
    It's more likely that you (and the other tiresome naysayers here) refuse to understand because you don't agree.

    The overwhelming reaction from analysts, financial media, financial commentators, and talking heads to the deal when it was first announced (as a rumor by the Financial Times) was negative. (For the record, I was quite negative about it too -- you're welcome to go back and check my posts.) Apple's stock price fell by much more than the market's did when this rumor came out.

    Look at the reaction of both the analysts and the market today.

    I think you guys are totally blinded by your hissy-fits.

    Nonsense. The "hissy fits" are grounded in reality. Apple's history up to now has not been about chasing marketshare and protecting old ground, it has been about "skating to where the puck WILL be". The Beats deal is "sitting on the puck."
  • Reply 44 of 95
    pdq2pdq2 Posts: 270member

    You know, with the Ahrends hire and now the Iovine/Dre acquisition, I think what Cook is really doing is assembling an all-star management team (and one which is not going to try to topple him, in the post-Jobs time, like some previous team members).

     

    And that's what I think is perhaps the most important Jobs-ian wisdom that Cook learned. Cook's a supply-line guy, and a good one. But he doesn't have Steve's RDF - no one does, and he'd be a fool to try to fill those shoes. What he can do is what Jobs did, which is put together the best talent he can find/hire/buy.

     

    Sometimes, all-star casts fall flat - the one that comes to mind is the movie "It's a mad, mad, mad, mad world", which packed in every well-known comedian of the day, and somehow wasn't funny - but with that caveat in mind, as an Apple fan and stockholder, I like what I see.

  • Reply 45 of 95
    flaneurflaneur Posts: 4,495member
    What "image" does Apple currently have among the "black community"? What exactly does Apple need to "build"?

    It's not clear what you're getting at. Are you some type of sociologist of the "black community"?

    I think you misunderstood him. He was making his point in opposition to this statement you lifted out of context.
  • Reply 46 of 95
    anantksundaramanantksundaram Posts: 18,894member
    Quote:
    Originally Posted by SpamSandwich View Post



    Nonsense. The "hissy fits" are grounded in reality. Apple's history up to now has not been about chasing marketshare and protecting old ground, it has been about "skating to where the puck WILL be". The Beats deal is "sitting on the puck."

    Not really. You're missing the point. It's about defending its leadership in existing turf (iTunes and music), turf that is a hugely important part of Apple's ecosystem, and one that made the iPod, iPhone, and iPad so successful in the first place.

     

    If iTunes is slowing, Apple has to figure out a way to rejuvenate it to make it grow. There are only two options to do so: do it organically (R&D, or research and development), or inorganically (A&D, or acquisition and development). The latter approach is what, for example, made iTunes and Siri possible.

     

    If it's the latter, the only relevant questions become: (i) Did Apple acquire at a reasonable price? and (ii) Will the acquisition help rejuvenate iTunes?

     

    On (i), I am absolutely convinced -- subject to very sketchy data, although Apple will have had access to tons of it from its due diligence -- that $3B is a reasonable price, just for the Beats headphones piece of it. If there's not a fit there, I'll bet (and someone else mentioned this as well) Apple can sell it for at least that much (+ time value of money). On (ii), I am inclined to cut some slack to Apple's management, since more than anything else, Apple seems to have been unable to rejuvenate iTunes organically (I'd add AppleTV interface and software to that list).

  • Reply 47 of 95
    rogifanrogifan Posts: 10,669member
    flaneur wrote: »
    Finally, reason has returned. You could have saved everybody a lot of time by thinking (instead of reacting) from the beginning. Congratulations.

    "Cheaper sub-brand" still reeks of your class-based prissiness, though. And we don't "use" Beats. We are fortunate to have Apple management that knows a wave to surf when it sees one.
    What are you talking about? Lots of companies have cheaper sub brands. Gap has Old Navy. Ralph Lauren has Chaps. J Crew is creating a less expensive brand. Look at the auto industry where you have luxury brands like Lexus and their less expensive counterpart Toyota. The more I think about it the more I think it makes sense for Apple to utilize the Beats brand as a way to go downmarket. Or at least be something completely different from the Apple brand. Utilizing Beats to create a fun/colorful and perhaps less expensive line of products isn't being prissy. Of course I have no idea if this is in Apple's plans. The press release de-emphasized the hardware business and Cook did shove it under Schiller and not Ive or Riccio. So maybe Apple is planning to leave it as is and just reap the profits of the existing brand.
  • Reply 48 of 95
    SpamSandwichSpamSandwich Posts: 30,581member
    Not really. You're missing the point. It's about defending its leadership in existing turf (iTunes and music), turf that is a hugely important part of Apple's ecosystem, and one that made the iPod, iPhone, and iPad so successful in the first place.

    If iTunes is slowing, Apple has to figure out a way to rejuvenate it to make it grow. There are only two options to do so: do it organically (R&D, or research and development), or inorganically (A&D, or acquisition and development). The latter approach is what, for example, made iTunes and Siri possible.

    If it's the latter, the only relevant questions become: (i) Did Apple acquire at a reasonable price? and (ii) Will the acquisition help rejuvenate iTunes?

    On (i), I am absolutely convinced -- subject to very sketchy data, although Apple will have had access to tons of it from its due diligence -- that $3B is a reasonable price, just for the Beats headphones piece of it. If there's not a fit there, I'll bet (and someone else mentioned this as well) Apple can sell it for at least that much (+ time value of money). On (ii), I am inclined to cut some slack to Apple's management, since more than anything else, Apple seems to have been unable to rejuvenate iTunes organically (I'd add AppleTV interface and software to that list).

    You know where kids get their music today? YouTube. Not for music videos, just the music. You know what kids watch today? YouTube. Minecraft and gaming videos. Maybe music sales are falling because of a sea change in music consumption in the youth demographic, which would mean that protecting the nest egg won't work when the tree just fell down.
  • Reply 49 of 95
    solipsismxsolipsismx Posts: 19,566member
    Nonsense. The "hissy fits" are grounded in reality. Apple's history up to now has not been about chasing marketshare and protecting old ground, it has been about "skating to where the puck WILL be". The Beats deal is "sitting on the puck."

    We can't possibly know that. All we know is that Apple is doing many things outside its norm by 1) making a huge purchase (8x more than NeXT, which is the highest purchase we're aware of), 2) keeping an acquisition as a separate entity and jeeping the branding (the next closest thing looks to be Siri which only kept its name, and 3) going after a highly established product, not a start up that is unknown.

    But why is this inherently a bad thing? Thinking different isn't about doing the same thing over and over again in a niche manner; lets leave that to kids who express their "individuality" by all donning the same look and style. Thinking different was about thinking outside the box, and sometimes thinking outside the box means you need to think within in when you're history has been outside it (e.g.: Ender using a formation for his last battle against two armies).

    That said, this could be a relative failure for Apple like Ping and many other attempts by Apple but we have so little information as to what Apple's longterm plans are that we can't rule out that Apple is skating to where the puck will be by virtue of not being privy of what Apple knows and sees. At this point I don't think we should second guess Apple's ability to know better than we do.
  • Reply 50 of 95
    rogifanrogifan Posts: 10,669member
    Not really. You're missing the point. It's about defending its leadership in existing turf (iTunes and music), turf that is a hugely important part of Apple's ecosystem, and one that made the iPod, iPhone, and iPad so successful in the first place.

    If iTunes is slowing, Apple has to figure out a way to rejuvenate it to make it grow. There are only two options to do so: do it organically (R&D, or research and development), or inorganically (A&D, or acquisition and development). The latter approach is what, for example, made iTunes and Siri possible.

    If it's the latter, the only relevant questions become: (i) Did Apple acquire at a reasonable price? and (ii) Will the acquisition help rejuvenate iTunes?

    On (i), I am absolutely convinced -- subject to very sketchy data, although Apple will have had access to tons of it from its due diligence -- that $3B is a reasonable price, just for the Beats headphones piece of it. If there's not a fit there, I'll bet (and someone else mentioned this as well) Apple can sell it for at least that much (+ time value of money). On (ii), I am inclined to cut some slack to Apple's management, since more than anything else, Apple seems to have been unable to rejuvenate iTunes organically (I'd add AppleTV interface and software to that list).
    I'd be curious to know how important iTunes (not the App Store) is to fueling hardware purchases. I use Spotify and can't remember the last time I bought anything off iTunes. I don't even use iTunes Radio because the sound quality is not nearly as good as Spotify. Apple needs a real differentiator here and it has to be more than curated playlists. I tried out Beats but there was nothing about it that would make me leave Spotify right now.
  • Reply 51 of 95
    Quote:

    Originally Posted by SolipsismX View Post





    Apple is skating to where the puke will be 

     

    I sure hope you're wrong about that :embarrass

  • Reply 52 of 95
    SpamSandwichSpamSandwich Posts: 30,581member
    solipsismx wrote: »
    We can't possibly know that. All we know is that Apple is doing many things outside its norm by 1) making a huge purchase (8x more than NeXT, which is the highest purchase we're aware of), 2) keeping an acquisition as a separate entity and jeeping the branding (the next closest thing looks to be Siri which only kept its name, and 3) going after a highly established product, not a start up that is unknown.

    But why is this inherently a bad thing? Thinking different isn't about doing the same thing over and over again in a niche manner; lets leave that to kids who express their "individuality" by all donning the same look and style. Thinking different was about thinking outside the box, and sometimes thinking outside the box means you need to think within in when you're history has been outside it (e.g.: Ender using a formation for his last battle against two armies).

    That said, this could be a relative failure for Apple like Ping and many other attempts by Apple but we have so little information as to what Apple's longterm plans are that we can't rule out that Apple is skating to where the puke will be by virtue of not being privy of what Apple knows and sees. At this point I don't think we should second guess Apple's ability to know better than we do.

    "...we can't rule out that Apple is skating to where the puke will be..."

    I know that was a typo, but I LOL'ed.

    Here's another way to look at this. Tim Cook is an operations guy at heart. He's all about finding single points of failure and creating a safety net so the company can deliver the goods. Jony Ive and the design department represent a bottleneck for Tim. By hiring Ahrendts, by buying Beats, Cook in many respects is making an end run around their own internal 'single point of failure' where it is now taking a full year or more to update product. (Just a theory that might explain some of these recent actions from Cook's perspective)
  • Reply 53 of 95
    anantksundaramanantksundaram Posts: 18,894member
    Quote:

    Originally Posted by Rogifan View Post



    I'd be curious to know how important iTunes (not the App Store) is to fueling hardware purchases. I use Spotify ....

    I am sure Apple has the data, and knows it well. What you (or I speculate) about this is irrelevant beyond compare.

     

    "I use Spotify.." therefore I know what dozens of millions of people are doing?! Wow, the arrogance (I've used that word in relation to your posts before) -- the silliness of generalizing about all of humanity from your one data point says it all for me.

  • Reply 54 of 95
    anantksundaramanantksundaram Posts: 18,894member
    Quote:

    Originally Posted by SpamSandwich View Post



    You know where kids get their music today? YouTube. Not for music videos, just the music. You know what kids watch today? YouTube. Minecraft and gaming videos. Maybe music sales are falling because of a sea change in music consumption in the youth demographic, which would mean that protecting the nest egg won't work when the tree just fell down.

    Again, as implied by my reply to Rogifan above, let me ask you: you think you have better data on this than Apple does? Really?

     

    C'mon, be serious. Please.

  • Reply 55 of 95
    SpamSandwichSpamSandwich Posts: 30,581member
    Again, as implied by my reply to Rogifan above, let me ask you: you think you have better data on this than Apple does? Really?

    C'mon, be serious. Please.

    It's not a problem if I'm wrong. It's a problem if I'm right.
  • Reply 56 of 95
    solipsismxsolipsismx Posts: 19,566member
    ...Cook in many respects is making an end run around their own internal 'single point of failure' where it is now taking a full year or more to update product.

    How is this any different than under Jobs? Remember the Mac mini was going to die? AI had umpteen stories about its imminent death because it went so long between updates. The only thing that has moved to a longer release cycle is the iPod, for obvious reasons, but I believe Jobs was still in control when they started that model. I think it's been user Cook that Mac OS X has moved to a yearly release cycle… which I love.
  • Reply 57 of 95
    island hermitisland hermit Posts: 6,217member
    Quote:

    Originally Posted by anantksundaram View Post

     

    Again, as implied by my reply to Rogifan above, let me ask you: you think you have better data on this than Apple does? Really?

     

    C'mon, be serious. Please.


     

    Is data the whole story here?

     

    All the data in the world doesn't guarantee that your plan will work.

     

    I agree that Apple is late to the party on this one.

     

    The writing is on the wall.

     

    Only time will tell if this Beats strategy is what it will take to right the iTunes ship or even if Apple is able to pull it off.

  • Reply 58 of 95
    flaneurflaneur Posts: 4,495member
    rogifan wrote: »
    What are you talking about? Lots of companies have cheaper sub brands. Gap has Old Navy. Ralph Lauren has Chaps. J Crew is creating a less expensive brand. Look at the auto industry where you have luxury brands like Lexus and their less expensive counterpart Toyota. The more I think about it the more I think it makes sense for Apple to utilize the Beats brand as a way to go downmarket. Or at least be something completely different from the Apple brand. Utilizing Beats to create a fun/colorful and perhaps less expensive line of products isn't being prissy. Of course I have no idea if this is in Apple's plans. The press release de-emphasized the hardware business and Cook did shove it under Schiller and not Ive or Riccio. So maybe Apple is planning to leave it as is and just reap the profits of the existing brand.

    No, I agree that Apple can reach another huge market here, but I wouldn't call it "downmarket" by going "cheaper."

    It's a matter of mindset, which Apple has shown us over and over again to be the primary starting point in this business of improving peoples' lives through artful technology.

    Beats has already accomplished this with their headphones by going against sound reproduction principles and making an acoustic environment that can be taken out in the world. Their market, which is huge, wants this, and it's why the headphones are a success, not because they are "trendy" —awful, white-yuppy word.

    So to suggest that Apple is going cheap and downmarket reveals a class bias that we don't want associated anywhere near this company. No, they are going outmarket, horizontally, into the majority of the earth's people, the post-colonial, post-industrial (including whites) young and ascendant aspirationals with attitude.

    And this is what has been driving people crazy about this deal. You have to share your Apple with a new unfamiliar group of people. Calling it cheap and downmarket allows you to accept it without giving up your class superiority. Unacceptable. Better than before, but you're still hanging back.
  • Reply 59 of 95
    Apple was very late to the subscription music train, this is them hopping aboard. Maybe they can catch up now. The only problem I had with it was the price, and this move by apple shows some desperation, but it's not like they can't afford it. I think the sum of all parts made it worthwhile for Apple in a way that it wouldn't for any other company. But separated, I'm not sure how each part will really survive. Does apple want to sell expensive headphones? Sure they can make an extra few hundred million a year - but at the expense of making their brand look like an over priced fashion statement? (Their headphones cost $14 a piece to manufacture). And the subscription service doesn't seem to be going anywhere too fast. The creative brains behind the company are promising to come up with products we can't even think of yet, sounds like some type of elixir they're selling tim. I hope tim isn't one of those elderly types that answers telemarketer phone calls, too. In the end, I think the only part of this package deal that means anything is the subscription service - and that's what cost $3 billion. Surprised they couldn't get a better service for that amount, or pay more for a better one. But, they can afford to place a bet on beats music with no problem.
  • Reply 60 of 95
    Quote:

    Originally Posted by pazuzu View Post



    I can see some value in Iovine but what's the value of Dre? And no it's not because he's black.

    Then what is it then? Without Dr. Dre there's no Beats by Dre and without Dr. Dre Interscope records were well on there way out of the business had it not been for him.  

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