A for Apple, B for Beats

Apple to acquire Beats

Apple is well known as a BRAND maker in IT industry. This company single handedly revolutionized many industries starting from Computers, Tablets, Phones to Music. The best part is unlike other companies, it deals with High-End market and it is quite successful in that market segment.

Except design, there are other three things that always believed to be going for Apple. Brand Recognition, Brand Loyalty & Marketing. Apple is still loosing in Music industry with all these good factors because time has changed and so has the way of listening to music. No one (that doesn’t mean ZERO) buys music now a days. Everyone now tied to a subscription model that Steve Jobs hated the most. The trajectory shifted from buying an album on iTunes to subscribing to a services like Xbox Music, Pandora or Spotify. Apple tried to walk on that path with iTunes Radio but failed miserably. This is not the only failure. Apple tried to make portable speakers with iPod Hi-Fi, but it didn’t work out. Those cool white iPod earphones also lost their coolness to the headphones like Monster & Beats.

Music Industry, where Apple ruled for many years with iTunes now losing the ground. It’s time for a fundamental shift & Tim cook knows it.

Dr.Dre, The famous Hip-Hop star (also known as the guru of EMINEM) joined hand with Jimmy Lovine to form a company that deals with “Audio Products”. They named it “Beats Electronics”.

In 2008, when Dre & Jimmy started the company they targeted the high-end market. Jimmy’s marketing arm was doing its job and within a year or two “Beats” became the heartbeat of music maniacs. Their favorite STAR was using it and they wanted it. Beats became a status symbol.

Beats was/is the master in collaborating with other companies. HTC & HP are the few of those companies who agreed to showcase its logo on their products. HTC even acquired 50.1% majority share of Beats for $309 million in August 2011. The plan of riding on the soldiers of Beat’s brand didn’t work out. So, in July 2012 HTC sold back half of its stake in Beats for $150 million and on September 2013, sold back remaining 24.84% for $265 million.

FOR

[Tim Cook knows what he’s doing]

Beats has three key ingredients that Apple needs to neutralize its deficiency and rule the music industry again.

• A good subscription based music service
• A great Brand for music equipments
• A high-end market to capture

Beats Music is the major part of this acquisition. It is platform agnostic and available on every major mobile OS i:e; Android, iOS, Windows Phone as well as the Web. It is a subscription based model like Apple wanted and it has a Cool/Hip reputation.

On the other hand. Jimmy Lovine is the chairman of Universal Music Group’s Interscope Geffen A&M music labels. He has strong contacts in the music industry, that will help Apple for potential future negotiations with music labels.

AGAINST

[Apple should learn from mistakes of others]

HTC, HP and others failed to ride on the brand value of Beats. Because for some, Beats products are over priced junks. Only thing that drives the force of these products is THE BRAND. Quality comes second and promotion sucks all the spending.

Apple acquired Steve Jobs with NeXT for $404 million and Steve made what Apple is today. He introduced revolutionary products like iPod, iPhone & iPad that changed the course of Apple and pushed it towards upward trajectory. Now Apple is acquiring Dr.Dre with Beats for $3.2 billion, I have no idea how important his role will be at Apple.

There are Some, who believe Apple wants to use the brand recognition of Beats for its upcoming smart watch (or whatever wearable they are cooking) to make it more appealing. In my opinion Apple itself is a Premium & more valuable brand. Apple always promoted its product with its own branding. integrating beats with their future product can only degrade the brand value of Apple.

Verdict

[Tim Cook is on a roll. Apple bought 24 Companies In 18 Months ]

Apple is happy to buy some stuff they were lacking and Dr.Dre is partying all night after being the first billionaire of Hip-Hop ;)

HTC bought half of it, no result. Apple is buying it full, result is yet to be seen…

I leave it for you to decide whether Apple is iNtelligent or iDiot.