Beats by Apple

Dredeals

It is not a surprise to me that this $3 billion deal is all about Beats Music. Others seem to agree. The way I see it, Apple CEO Tim Cook is trying to replace some of Steve Jobs’ skills by bringing in the best in business. Angela Ahrendts has the chops to take Apple retail into a new territory. Jimmy Iovine will be running Apple’s content side of the house. Jony Ive is still a powerhouse in design. This is a good approach.

Some say, Apple paid about 2x revenues for Beats from its overseas stash of cash, so it isn’t that expensive a deal. It also allows them to extend into non-Apple markets. That said, despite all the hoopla, Apple’s music business doesn’t make them as much money. And the problems for Apple are elsewhere. 

Apple’s Achilles heel is its inability to come to terms with a world where, data, cloud and services define the experience, not just great hardware. When it comes to the Internet and Internet-services, they are and will continue to be reactive. Culturally they don’t grok the importance of that problem, they don’t have anyone on the senior management team who is data-native to understand the problem, so they don’t know how to solve that problem.

So, they will continue to have a problem.  Deals like Beats won’t be the last such deal. As a friend of mine once told me, that for most of us — time buys us money, for those who are rich, money buys time. Apple’s just buying time! 

Responses

  1. DBMC BLOG says:

    May 29th, 2014 at 3:21 pm Reply

    First of all, great article! Second, I totally agree — Apple is just buying time. Tim Cook has been a leader without direction for sometime now. It’s just starting to show more since their last acquisition. I was a big fan of Steve Jobs. I miss him. I wonder what he would’ve thought about this deal.

  2. Andrew Burwell (@Raddock) says:

    May 29th, 2014 at 11:27 am Reply

    Apple is also struggling with it’s own software teams. They’re spread thin, and it seems they’re regularly move people around to fill in gaps when big software product changes happen. I could see this deal as a way to offload their iTunes software / business into capable hands while the existing teams focus on their other platforms iOS, OS X, iWork, iLife.

  3. Jacob Leffler (@jacobleffler) says:

    May 29th, 2014 at 9:44 am Reply

    Apple bought the streaming music service LaLa a few years ago. What did it do with it? Nothing. What a waste. What will make this Beats deal any different? Maybe the talent, as you stated above. LaLa was a great model and they just killed it. I’m not confident for the reasons you stated, and more.

    1. Max (@maxkucheto) says:

      May 31st, 2014 at 7:16 am Reply

      “What did it do with it? Nothing”
      They used LaLa to build iTunes Match and iTunes Radio. iTunes Radio now has 40 million listeners according to Eddie Cue at Re/Code. The same as Spotify. In just one year.

      If that’s “nothing” I’d really like to know your definition of something. Apple does have massive room for improvement, but some of the comments here, yours included, seem to come from some alternate universe where nothing Apple does counts, and anything they do very successfully in the cloud can’t possibly count, because Apple doesn’t get the cloud.

      Ted T. (sorry, posting from my dog’s Twitter account, but maybe that’s oddly appropriate)

  4. Kfir Pravda (@kfirpravda) says:

    May 29th, 2014 at 3:53 am Reply

    Interesting to compare it to the changes in Microsoft. With a cloud guy leading the organization, it seems like good things are happening there.

  5. Indie Song A Day (@IndieSongADay) says:

    May 28th, 2014 at 7:42 pm Reply

    Beats Music is no different than Pandora, Spotify, or Rdio. Sure they all have their own recommendation methods but in the end they are quite similar.

    None of them has done anything groundbreaking. Spotify’s apps are interesting but make it cluttered and the UI is a bit of a mess. (How many ‘apps’ do we need for individual artists? Here’s a clue – Zero) Beats Music’s curated playlists are really no different than Spotify’s artist/user generated playlists and that seems to be what they’re hanging their hat on.

    They all fail to create a whole package that is automatic, intuitive, AND complete. (I won’t go into what I think that encompasses here) Let me just say that they aren’t as successful with recommendations, education, notifications, and user effort as they should be at this juncture.

    I don’t think Iovine and Dre understand that aspect of it either and I can’t believe Apple is making this deal for the headphone tech. I’d be shocked if Beats Music has a v2.0 waiting in the wings that’ll be substantially different than the current version which is rather lackluster.

    Music technology has been treading water for almost a decade now, and that includes today’s release of Beats Music 2.1.

    1. Indie Song A Day (@IndieSongADay) says:

      May 28th, 2014 at 8:49 pm Reply

      I said “2.0 waiting in the wings”, I meant 3.0. They released 2.1 today. :)
      More thoughts on this here: http://www.alternapop.com/2014/05/28/thoughts-apples-acquisition-beats/

  6. jmaples says:

    May 28th, 2014 at 4:21 pm Reply

    Reblogged this on JonMaples.com.

  7. Schtaunkhauser (@Schtaunkhauser) says:

    May 28th, 2014 at 4:17 pm Reply

    I think we have higher expectations of ‘new hardware’ at WWDC than some crappy headphones.

  8. phoebusboy1 (@phoebusboy1) says:

    May 28th, 2014 at 4:15 pm Reply

    Apple needs to capitalize in this acquisition by making a soundbar that has an AppleTV embedded into it and take over the distributed audio market dominated by Sonos. Brand it powered by beats.

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