Apple confirms it's 3 billion deal for beats electronics

N2IT

http://www.nytimes.com/2014/05/29/technology/apple-confirms-its-3-billion-deal-for-beats-electronics.html?_r=0

Wow - speechless and interesting at the same time.

phoeneous

Dre makin it rain!

MSP-IT

They're basically paying for the image. The product itself is nothing special. I would think that their money would be better spent on a name with quality behind it.

IS3

Yeah like Sennheiser or AKG

tpatt100

I was listening to this week's TwiT podcast and somebody mentioned that it has name recognition for the younger crowd of a different demographic which I guess makes sense but not 3 billion worth of sense. The other is the streaming service has license agreements of some sort. I really don't have a clue though. Then again companies have bought app developers for a lot of money also so who knows.

N2IT

phoeneous wrote: »

Dre makin it rain!

From NWA to Apple!

rsutton

I've seen a lot of hate on the Beats deal but I gotta hand it to Dre - everything he touches turns to gold. Ain't nothin but a G thang!

DevilWAH

I was shocked that they are basically paying all this for a streaming service that has 110,000 users. Headphones that are nothing special and a Name. Spotify has 10 million users and its starting to approach the $3billion mark.

I have a feeling apple just wants the publicity, there about to launch a steaming service so one good way o insure people know about i is a massive buy out in the news.

It will either be a huge success and run away, or a very expensive gamble. Is like MSP said, its all about the image not the poducts.

tpatt100

Spotify still hasn't generated a profit though, I don't think any of the streaming services has made a profit yet. Beats had 1.4 billion in revenue last year not sure what their final profits are but I read Dre was paid 110 million. If they have most of the over 100 dollar head phone market the streaming music doesn't have to worry so much about it's profitability because like Apple they have a hardware market that is profitable that goes with music and entertainment. The streaming services pay so much in licensing fees since the music industry charges internet radio way more than terrestrial radio stations.

darkerosxx

I like how they're all wearing jeans and untucked shirts. Mostly, anyway.

N2IT

rsutton wrote: »

I've seen a lot of hate on the Beats deal but I gotta hand it to Dre - everything he touches turns to gold. Ain't nothin but a G thang!

Too much hate on beats!

Love seeing Apple and Dre come together. I think it makes a lot of sense. The market penetration for some demographics shot way up.

DevilWAH

tpatt100 wrote: »

If they have most of the over 100 dollar head phone market

But the >$100 slice is actually a minority of the headphone market.

I am still confused by what Apple are going to do with it. Thay have a solid hardware brand, and a streaming service. The Beats hardware is nothing special, technically its not innovating and most audiophiles and audio engineers agree that in terms of quality and innovation its not a leader. So apple are not gaining any IP or patents. I tunes is a house hold name, and adding streaming to it is nothing cleaver.

So it seems $3billion for a name, and names go out of fashion, seems to me good business be Dr Dre and a little less by apple. Mind you where are apple going at the moment? no real new innovation out of hem for a while now.

tpatt100

DevilWAH wrote: »

But the >$100 slice is actually a minority of the headphone market.

I am still confused by what Apple are going to do with it. Thay have a solid hardware brand, and a streaming service. The Beats hardware is nothing special, technically its not innovating and most audiophiles and audio engineers agree that in terms of quality and innovation its not a leader. So apple are not gaining any IP or patents. I tunes is a house hold name, and adding streaming to it is nothing cleaver.

So it seems $3billion for a name, and names go out of fashion, seems to me good business be Dr Dre and a little less by apple. Mind you where are apple going at the moment? no real new innovation out of hem for a while now.

Apple is a solid brand for select demographics, even if it is mainstream those are becoming saturated. Audiophiles are a niche group and the mainstream doesn't even know what an audiophile is. I just know the term from my home theater magazine reading days seeing articles full of weird pseudo science, green markers and 100 dollar speaker wire lol.

From what I can tell so far is that I am not aware of Beats too much because I am not their target demographic. iTunes is losing share to streaming services that don't make money so maybe it's more an acquisition of the people in the company with Dre and Jimmy Lovine and their connections.

Now, Apple is counting on Mr. Iovine, a longtime friend of Mr. Jobs, to nurture partnerships with the music industry and other content creators, according to people familiar with the matter. Mr. Iovine's personality and entertainment industry connections may help Apple with content deals.

Mr. Iovine began his career as a music producer, working with Bruce Springsteen, U2, Patti Smith and others, but he has distinguished himself with savvy and inventive marketing. When online piracy eroded music sales, Mr. Iovine encouraged Interscope executives to think of themselves as "brand managers" with an array of products beyond recordings, including clothing, electronics, and even beverages. Beats By Dr. Dre headphones represent the most successful version of that strategy.

GLaDOS11

One overpriced/pay-a-huge-premium-for-the-name company purchases another overpriced/pay-a-huge-premium-for-the-name company!


In all seriousness, this is a really good move for Apple because you have to imagine that 99% of the Beats target audience are the type that thinks Apple can't get viruses and that they make the most technologically advanced hardware in the universe. Apple and Beats are a match made in heaven.

DevilWAH

May be its just the streaming licencing they want. Licencing for streaming is complex to get and manage. in effect they could simple transfer the licences to there itune produce and enable streaming....

forget the headphones and hardware.

phoeneous

N2IT wrote: »

From NWA to Apple!

Gangsta all day, err'day!

N2IT

I can't wait till the iPhone 6 comes out with Beats head sets. That's going to be smooth.

cyberguypr

I read an comment somewhere that summarizes it for me:

"What company in their right mind would pay 3 billion for another that sells way overpriced products that people buy only because of brand popularity and coolness and making a fashion statement and... oh... wait... nevermind. Perfect match. "

DevilWAH

N2IT wrote: »

I can't wait till the iPhone 6 comes out with Beats head sets. That's going to be smooth.

how??? the iphone hasn't changed singe the first version, just got a bit faster and more memory. Beats are no different to any other head phones. I am failing to see where apple are going any at the moment. They have gone from leading the tablet and phone market to just another player. Sooner or later some ones going to come along with a real innovation, and the apple products are going to start looking very old.

daviddws

3 billion is a drop in the bucket for Apple. I'm predicting more purchases in the future, they have a TON of money to spend.

N2IT

daviddws wrote: »

3 billion is a drop in the bucket for Apple. I'm predicting more purchases in the future, they have a TON of money to spend.

Exactly. Good pick up IMO. The youth in the US are going nuts over Beats products. All the kids in highschool and college are using them.

N2IT

DevilWAH wrote: »

how??? the iphone hasn't changed singe the first version, just got a bit faster and more memory. Beats are no different to any other head phones. I am failing to see where apple are going any at the moment. They have gone from leading the tablet and phone market to just another player. Sooner or later some ones going to come along with a real innovation, and the apple products are going to start looking very old.

Market penetration.

Look at the demographics you can market to? Kids from 18 - 25 are going wild over these products. While Bose and whatever other brands may or may not be better, Beats are bringing it down.

They are marketed much better than the other products. I think the purchase makes a lot of sense. Apple start to penetrate additional markets leveraging the Beats product. IMO this is as clear as it can get.

It's a great move.

gc8dc95

I agree, that it is going to be largely a marketing move on the hardware side. Apple can now put the Beats label on stuff and probably pickup a few more customers.

I think what they really paid for was the streaming service and licensing. Hopefully they take a good look at that and use it effectively. iTunes is known by everyone, but everyone also knows its garbage

DevilWAH

N2IT wrote: »

Market penetration.

Look at the demographics you can market to? Kids from 18 - 25 are going wild over these products. While Bose and whatever other brands may or may not be better, Beats are bringing it down.

They are marketed much better than the other products. I think the purchase makes a lot of sense. Apple start to penetrate additional markets leveraging the Beats product. IMO this is as clear as it can get.

It's a great move.

But its not a new market, if you see the people who are wearing beats they have them plugged in to an iphone, they are targeted to the same same audience as they already have.

While beats is a separate product it find, but now Apple is saying spend £400 on an iphone then give us another £150 for some head phones. Peoples nature is to think spending the same amount of money on two products/brands is better value than on a single one, so will end up looking for seperate "cool" headphones.

N2IT

DevilWAH wrote: »

But its not a new market, if you see the people who are wearing beats they have them plugged in to an iphone, they are targeted to the same same audience as they already have.

While beats is a separate product it find, but now Apple is saying spend £400 on an iphone then give us another £150 for some head phones. Peoples nature is to think spending the same amount of money on two products/brands is better value than on a single one, so will end up looking for seperate "cool" headphones.

To say the same folks who use iPhones also use Beats is hiliarous. You just gave me a good laugh.

omi2123

BOSE still out do a beat

DevilWAH

They do, those who prefer style of substance. The people who purchase by brand and have no knowledge of the technology behind the product. Both Beats and Apple are style icons first and technical innovators second.

tpatt100

Technical innovators get bought out by companies that can move product at a profit. Look at Google most of their products are acquisitions of different companies/developers. They just grabbed developers from Springpad rather than buy them and Springpad finally gave up and announced they are shutting down.

If you are in the consumer market you need consumers to buy stuff. Apple bought the company that made the original Kinect for Microsoft a while back. Very little of the technoloigical advances make a big impact in the consumer market. They just get bought by bigger companies and integrated and nobody knows who really developed that big new feature.