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Apple Confirms Its $3 Billion Deal for Beats Electronics

nytimes.com

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Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#81

Post by chadgeidel »

abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

I agree. I think the music industry connections are probably more important than the headphones themselves. It's the brand and the associated people.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#82

Post by lmg643 »

gareim wrote: post #25

Apple redefined the mp3 player market, the ultraportable laptop market, the smartphone market, the tablet market, and now they're buying a company that reinvented the higher-end headphone market. Is it smart of a brand that has traditionally created their own iconic images to buy another cultural icon for $3 billion? I don't think so. Maybe this gets used a lot, but would Steve Jobs have done this? Or would he have c…

I totally agree. The question I ask is whether Beats is the kind of headphone that Steve Jobs would personally design and use. The "steve" test seems to guide everything else they build, so why not extend to headphones.

The way I see it, the answer seems to be "no." The headphones are bulky, the logo gaudy - just not Steve. The advertising - think of the superbowl ads that rankled Seattle fans - just not really Apple's style or ethos.

I can't underestimate Apple - they are a wildly successful company, and may well see something great that I can't. Guess we'll just have to see.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#83

Post by zavi »

nostromo wrote: post #74

Is music even still important to Apple? The iPod is in a longterm decline. Low margin music streaming has replaced purchased mp3s. I think music has changed from the main event in the Apple ecosystem to a minor attraction. It seems like Apple is looking backwards and defensively, not forward and offensively on this one.

More streaming vs purchasing mp3s doesn't mean people will be using headphones less.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#84

Post by smackfu »

jotm wrote: post #79
apalmer wrote: post #61

Earlier quoted context omitted.

Factually true, but as they created and own pretty much the entire market for $300 headphones, one has to concede they have the title of high end headphones... high end doesnt necessarily mean highest quality.

Not really true - Sony and Sennheiser (as well as AKG and other less known companies) had the market covered already.

I think the idea is that Beats expanded the market for $200-400 headphones. Yes, Sony sold headphones in that range, but they didn't sell them to every high school student who wanted to look cool.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#85

Post by nardi »

JumpCrisscross wrote: post #23

The meat of this deal isn't likely the streaming service. Beats Music had only 111,000 subscribers as of March [1]. Compare that to Spotify's 10 million paying subscribers, 30 million non-paying users, and $4 billion valuation. The deal's financial logic is driven by Beats's $1.3 billion business (in 2013) of selling high-priced headphones. Given Apple's P/E ratio of 14.9x earnings [2], the acquisition would make sen…

In the article, Tim Cook says, "It's the people. It's the service."

Are you saying you don't believe he's telling the truth about their motivations?

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#86

Post by [deleted] »

gareim wrote: post #25

Apple redefined the mp3 player market, the ultraportable laptop market, the smartphone market, the tablet market, and now they're buying a company that reinvented the higher-end headphone market. Is it smart of a brand that has traditionally created their own iconic images to buy another cultural icon for $3 billion? I don't think so. Maybe this gets used a lot, but would Steve Jobs have done this? Or would he have c…

[deleted]

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#87

Post by arrrg »

gareim wrote: post #8
k-mcgrady wrote: post #5

An important quote from the article: >> “Could Eddy’s team have built a subscription service? Of course,” he said. “We could’ve built those 27 other things ourselves, too. You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.” From my usage of the Beats streaming service it stands head and shoulders above everyone else because of the people it has creating pl…

Even though Cook said it's not about building it, "it's the people. It's the service", is $3 billion worth what is essentially an acquihire? EDIT: Right, it's still a profitable business regardless and I should have touched on that. But I don't want to see big tech companies acquire just for profit. They become behemoths that die slow deaths. I want to see Apple continue to reinvent based on their vision. I don't wan…

I don’t think anyone is arguing Apple bought them for the revenue. Apple is making enough money, they really don’t need this tiny revenue stream.

However, if they really only want part of Beats, they still have to buy the whole company, revenue and all. They have to pay for it.

This is less of a problem than it seems, though. One plausible scenario is that Apple just keeps the hardware part of Beats separate and making money, while getting all the rest of the people working for Beats on board.

This is a large acquisition, but it’s not super huge and mostly so big because Beats successfully makes and sells hardware. If they keep that part separate and independent of Apple in the future this might actually turn out to be a tiny acquisition, more in line with Apple’s past music acquisitions. Think Lala: http://en.wikipedia.org/wiki/Lala_(website)

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#88

Post by huxley »

toxican wrote: post #80
gareim wrote: post #25

Apple redefined the mp3 player market, the ultraportable laptop market, the smartphone market, the tablet market, and now they're buying a company that reinvented the higher-end headphone market. Is it smart of a brand that has traditionally created their own iconic images to buy another cultural icon for $3 billion? I don't think so. Maybe this gets used a lot, but would Steve Jobs have done this? Or would he have c…

I get a little kick out of things like this because I just know Steve Jobs would flip shit if he were still alive. I really don't see how this is a smart move for Apple. I'd love if they prove me wrong, but I don't think they will.

If this was the very stupidest thing Apple has ever done--a massive colossal waste of money that needed to be written off--they would still have $183+ billion cash on hand that they could cry into.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#89

Post by austenallred »

abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

It seems a bit absurd to pay $3 Billion for an acquihire/component deal, but Apple has $145 Billion in the bank and just bought the most popular non-Apple name in music.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#90

Post by sscalia »

nostromo wrote: post #74

Is music even still important to Apple? The iPod is in a longterm decline. Low margin music streaming has replaced purchased mp3s. I think music has changed from the main event in the Apple ecosystem to a minor attraction. It seems like Apple is looking backwards and defensively, not forward and offensively on this one.

It might be hard for someone with an autism-spectrum order to understand, but normals really love music. It's part of being a human being.

So yes, Music is extremely important. For anyone.

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