If Steve Jobs lived, the decision of Apple to pay 3.2 billion dollars to buy a company that makes fashionable headphones would not been disputed by anyone. For Apple 3.2 billion can be earned in three weeks! It is a fact that until now the tactic of acquisitions was based on small unknown companies who made innovative products, which are incorporated in the Apple ecosystem. The information that Apple is buying Beats, company of the former 49 year old rapper and producer Dr. Dre and 61 year old music industry mogul Jimmy Iovine, hiding behind superstars such as U2 and Lady Gaga, left the perplexed analysts to devise scenarios. The Beats company, within six years, has established itself as a brand in the music industry, with a share of 65% in the luxury headphones.
Based on technology developed by a small audio product company Monster, of the self made Noel Lee, launched earphones with a modern design in different colors and signed by the name of Dr. Dre. Rappers, DJs and celebrities introduced them as a fashion accessory, while the founders invented many different ways to advertise them, like giving them away for free to famous athletes. Experts point out that the Beats, which cost up to 400 euros, do not justify the price in terms of quality and that the world pays mainly their brand. The listening experience, with Noise Canceling system and deafening bass, is like having a club in your ears. The company has succeeded to gain more than 1.2 billion dollars a year.
One scenario is that Apple wants to build the hybrid fashion-lifestyle of Beats marketing to a new generation of technological accessories that will be worn. Another has to do with the distribution of music. The model of track market, where Apple has dominated for 11 years through iTunes, is getting old. The turnover of the legitimate downloads downturn presents a sign that the public wants to hear music, not to fill in their hard drives with thousands of songs. The successor is streaming: the legacy subscription type service of Spotify, which provides access to millions of songs, with the option of lists and registration preferences. Beats has already launched its own service, arguing that it is the most advanced available, with algorithms that make an entire playlist for each user, depending on the time, mood or location for 9.99$ per month.
The problem with both scenarios is that Apple does not theoretically need a company like Beats, neither in design nor in handling music technology. And here comes the 3rd scenario: Apple is a worldwide giant without the pioneering founder, pressed by competition from Google and Samsung and has apparently the need for the next revolutionary launch, to attract fresh minds. Recently they gave 68 million dollars for the transcription of Angela Ahrendts, the manager who resurrected the fashion house of Burberry, which took over the commercial part. The Dr. Dre and Jimmy Iovine may be, through the acquisition, their subsequent transcripts.
By Nicole P.