The dust from yesterday’s rumored acquisition hasn’t settled, but it’s already set off a bit of a firestorm on Twitter and elsewhere. Apple buying a company, by itself, isn’t big news. Over the past year, they’ve acquired 18 companies. This one is different. For one, if it is for $3.2 billion, it will represent the biggest acquisition to date for Apple. While 3D mapping companies aren’t sexy, Beats is just that. It’s co-founders, Dr. Dre and Jimmy Iovine, are magnetic personalities that are well known in the music industry. The two launched Beats Music, a competitor to Spotify and Rdio that launched earlier this year. Their company is known for their popular Beats headphones, which cater to a younger demographic. Did Apple buy Beats for the headphones?
Apple Is Already The Most Recognized Headphone Manufacturer
Since the dawn of the iPod, followed by millions upon millions of iPhones, the white earbuds that ship with every Apple iPod and iPhone makes them the most recognized manufacturer of headphones. When you see someone wearing a pair of white headphones, the immediate though is Apple. Their brand instantly recognizable and deep rooted in audio. While the quality is debatable, these are products which are included with an iPhone or iPod. If Apple were to include Beats headphones, it’s not as if magically we’d all start receiving $200 headphones with each new iOS device. But there is an opportunity here…
Beats As A Sub-Brand
Beats is a young, hip brand. In fact, despite enjoying Beats Music, admittedly it makes me feel a bit old. I’m not their target demographic. Kids buying iPhones and iPods, you bet. Just how Apple would utilize the Beats brand would be interesting. It would also be suprising and a first for Apple to utlize a sub-brand, something which HTC tried with their One smartphones featuring Beats Audio. They slapped on a noticeable and garrish looking logo. Despite the unfortunate logo, the sound quality was actually quite good, the best I’ve heard coming from a smartphone. If Apple wanted that sound, I can say with a fair amount of certainty, that it could be attained with having to spend $3.2 billion.
Would Apple put a Beats Audio logo on the iPhone 6? Not unless Jony Ive were taken hostage, with the price being the unfortunate logification of Apple’s iPhone. Beats on an iPhone would be akin to a bumper sticker on a Porsche.
Creating Differentiation Among Smartphones
Come this fall, Apple will likely jump into the ‘big smartphone’ fray. All major smartphone manufacturers will have all but exhausted bumps in processor speed, megapixels and now screen size, making it harder to create differentiation. It will become a battle of refinement, both from a hardware and software perspective. Apple, with help from Beats, could certainly improve upon the quality of the headphones that ship with the millions of smartphones they sell each year. Beats shared, if not dominated, the branding on the HTC One. On an Apple product, it would be more akin to a feature footnote. The headphones you get with every iPhone, are now made by Beats. This could be a small, but significant value-add.
It remains to be seen exactly what Apple’s plans are for Beats, provided the acquisition is finalized. Apple didn’t buy Beats for the headphones, nor did they buy it for their music service. I would suspect that it’s not one thing, but the sum of Beats that made it an attractive target for Apple.