It is the merger rumour heard ‘round the world—through funky headphones, no less.
Reports recently emerged saying Apple may be interested in acquiring Beats Electronics, the company best-known for its Beats By Dre headphones. The company was founded by hip hop icon Dr Dre and music producer Jimmy Iovine and, in addition to its iconic headphones, is a music streaming operator.
If Apple does close the deal to buy Beats, the reportedly $3.2-billion deal will be the largest in Apple’s history.
Here’s the chatter on whether this would be a smart purchase and how it could help Apple’s business and its brand.
Gordon Kelly @ Forbes
While he writes that Apple’s acquisition of NeXT in 1996 made sense, in part because the latter company’s software became the “basis of Mac OS for the next decade,” Kelly believes the Beats deal “is absurd and suggests Apple’s executives have completely lost the plot.
“Apple is paying $3.2 billion for a fashion statement. This isn’t being unkind to Beats. Since it was founded in 2008 the company has been a marketing phenomenon. Dre’s involvement grabbed the attention of millions who had never considered premium headphones and its red cables and distinctive logo have become iconic. But behind this there is virtually nothing of use to Apple.”
Victor Luckerson @ Time
Fondly reminiscing about his first iPod, a 20 GB white, fourth-generation one he got in 2004, Luckerson writes of how his musical horizons broadened because he could ditch his CD booklet for a tiny device that contained 20,000 songs. “My range of musical tastes exploded, and the idea of listening to songs from entirely different genres back-to-back became natural. Apple’s brilliant marketing, featuring dancing silhouettes rocking out to U2 and Daft Punk while wearing those iconic white earbuds, made all my high school friends immediately envious of my new toy.”
Turning the topic to Beats’ headphones, he continues “Young people today are envious of those giant headphones the way my friends were of my iPod a decade ago. Perhaps, then, Beats is the quickest way for Apple to reclaim its position at the epicenter of the music world. The company’s headphones are already a huge business in a market Apple doesn’t currently address. Beats also has ironed out deals with all the major record labels to launch its streaming service Beats Music, which boasts a slick, intuitive mobile interface that would make Steve Jobs proud.”
He concludes that “… music is integral to Apple’s DNA in a way that extends beyond the balance sheet. It’s what first defined the resurgent tech giant in the early 2000’s, and it is still often used as a central element of the company’s marketing. Music is part of what makes Apple cool, and the company doesn’t want to lose that.”
Matthew Garrahan and Tim Bradshaw @ Financial Times
“While Beats commands a leading position in the premium headphone market, its real value to Apple is in revitalising its “cool” at a time when iTunes has waned in popularity and Samsung’s marketing campaigns have savaged the iPhone’s brand. Apple executives have admitted that its brand is in need of a revamp. Internal e-mails released during its recent patent trial with Samsung showed that its marketing chief Phil Schiller considered changing Apple’s ad agency after the success of its Korean rival’s ‘next big thing’ campaign.”
Samuel Gibbs @ The Guardian
“Beats is one of the most high-profile brands in headphones. The designs are big, flashy and bold; an excellent example of brand and style over substance, as Beats headphones demand a large premium for middle-of-the-rad sound quality.”
Gibbs goes on to write that Apple is, first and foremost, buying a brand if it acquires Beats. “Beats also has a history of clever, if somewhat unorthodox marketing strategies. Its beginning, with product placement in music videos was key, but a standout was the (alleged) circumvention of 2012 London Olympics sponsorship agreements that barred brands from being advertised during the Olympics that were not official Olympic sponsors.
It’s said Beats got around the ban by giving specially decorated headphones to key athletes, who duly wore their brand new headphones walking out to events. At one point almost every swimmer in certain finals came walking out to compete wearing large Beats cans, presumably replacing whichever headphones they would have normally worn as part of their isolation and warm up strategies.”
