Thursday, May 29, 2014

Apple Acquires Beats: Something Big is in the Works

The tech rumor mill has been buzzin’ very loudly all month about Apple acquiring Beats.  And now it’s actually happened.

It’s the biggest acquisition that Apple has ever done, so that in itself, makes this very significant.  Apple’s strategy, unlike many tech titans, is to do small, strategic acquisitions.  And they do a lot.  But they are very smart and very quiet about it.  They decide what tech they want, then decide to build or buy it, and go for it.  Some are just for R&D and don’t evolve into a product or product feature, but many do.

By contrast, Beats brings with it fully mature and very well known products - entire product lines actually.  Which is another thing that makes this acquisition very different for Apple.

So the rumor writers, pundits and analysts have been going monkey nuts about why Apple would make an acquisition so very different from what they typically do.  Although they’ve been all over the place, I think that the top reasons come down to these:

Top talent - Dr. Dre, Jimmy Iovine and their team big high powered entertainment chops and in the style of Apple.
Beats Music - Apple will make the move in to on demand streaming music, to go beyond radio, and this can make it happen now. 
Beats audio products - The hip audio accessories bring real profit and more tech cool factor, that is instantly valuable.

But I think there’s more that we haven’t heard about yet.  While all that stuff makes for some great reasons to spend $3 billion for anybody, this is Apple we are talkin' about.

While lots of other tech companies blow that kind a green easily on acquisitions, for Apple $3B is a ton of cash to spend for a few great tactical moves.  So there must be more.

Apple has the best talent around, and Tim Cook and Eddy Cue made some comments directly about Beats talent.

Music has been part of the soul of Apple since even before the iPod was launched in 2001.  But still, there must be more. 

But what ?  It could be lots of things.  Perhaps some tech that they've been secretly working on together for a while. Certainly the music industry relationships are of big value.  But is there something even bigger than just music that Beats has in the works.

Perhaps a platform for building businesses on top of music ?  A business platform that can do things that no other music or content platform has been able to do.  That can go beyond just music.  That already goes beyond iOS, with continued support for Android and Windows Phone.  To TV perhaps ?  Apps ?  More ?

Beats audio products, while great in quality and design, aren't exactly unique inventions.  Are there some extraordinary patents that Beats has that we don't know about ?

iTunes music has been slowly dropping in revenues for a while.  And music purchases have been dropping everywhere.  Perhaps this is simply a huge bold move to leapfrog the competition in music with streaming, music accessories and talent all in one big shot.  And with a big splash just days before WWDC.

But I think something else is up that we haven't seen yet......  Hmmmmmmm ?

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