Apple buys Beats for $3.2 billion

[smackababy]

http://www.engadget.com/2014/05/09/beats-apple-confirmed/


I don't actually think this is a bad move for Apple. Beats are easily the most popular headphones, even if the snooty audiophiles cry about how bad they are. Reminds me of all the people who cry about how bad the iPhone is, and their Android phone is so much better; yet, the iPhone still sells 10x more than their phone of choice.

Hopefully, this improves iTunes radio (because it sucks) and ups the quality of Beats. I got a free pair of the $300 first gen set (the ones made by Monster) and they are okay, but not amazing.

 

[Kaido]

There's definitely something dodgy about this. In fact I'm even beginning to have doubts that Dre is a doctor at all.

 

[smackababy]

$3.2 billion, he can buy an honorary doctorate from any college and be one now. Plus, Detox is pretty much confirmed to be no longer coming out. "I'm too rich to care anymore" - Dr. Dre 2014

 

[dma0991]

Terrible acquisition by Apple, if its for their knowledge in making good sounding headphones. Beats headphones are 95% marketing fluff and 5% substance. I don't proclaim to be an audiophile but they are pretty bad, I've tried a store demo unit. This is of course having experienced hearing with Audio Technica M50s and AD700, which are mine.

They are indeed popular but that's only because there's a ton of its cheap imitation in the market and not surprising since its terrible sound isn't that hard to replicate.

It cannot be compared to the iPhone in any way. Apple products are expensive but they do deliver the quality that you'd expect. Beats headphones however, look great but doesn't perform as well as its price tag.

 

[smackababy]

They are indeed popular but that's only because there's a ton of its cheap imitation in the market and not surprising since its terrible sound isn't that hard to replicate.

This makes zero sense. Why would they be popular if there is a ton of cheap imitation?

It cannot be compared to the iPhone in any way. Apple products are expensive but they do deliver the quality that you'd expect. Beats headphones however, look great but doesn't perform as well as its price tag.

The iPhone was never (except, at inception) the highest performing or best smartphone. There are plenty of others that are more powerful, have better features, and such. However, the iPhone is a consistent best seller. You don't see Apple commercials making fun of Samsung's new phone.

Beats has a music service that is better than Apples. And a brand value on par with Apples. Beats are the cool thing to have. In their first year, they gained 60% of the $100+ headphone market share.

 

[coffeejunkee]

As I understand it (and also mentioned in the article) it's mainly the Beats audio streaming service they're interested in. I've heard about it for the first time today, I have no idea how popular it is. Seems to me you could improve your own service quite a bit for 3.2 billion. Or just buy Spotify, might cost a bit more but at least in Europe it's by far the most popular streaming service.

Personally I will never buy anything with a Beats logo.

Also: how come Heineken is seen as some kind of premium brand? In Holland it's rated slightly above stale urine. Want a real good Dutch beer, search for Lindenboom or Hertog Jan (not likely you will find it but I did my duty).

 

[Rakehellion]

The iPhone was never (except, at inception) the highest performing or best smartphone. There are plenty of others that are more powerful, have better features, and such.

"Better features" is subjective. They've had the best GPU performance and color gamut for a long time and there's no 4-inch phone that can touch it in CPU performance or battery life.

 

[dma0991]

This makes zero sense. Why would they be popular if there is a ton of cheap imitation?

Because imitations try to look as close as its original. Beats branding is still there, hence free marketing and overinflated perception of its popularity.

The iPhone was never (except, at inception) the highest performing or best smartphone. There are plenty of others that are more powerful, have better features, and such. However, the iPhone is a consistent best seller. You don't see Apple commercials making fun of Samsung's new phone.

Beats has a music service that is better than Apples. And a brand value on par with Apples. Beats are the cool thing to have. In their first year, they gained 60% of the $100+ headphone market share.

If Apple sold on the metric of being the highest performer and excelling only at benchmarks, they wouldn't be where they are now. We can use absolute performance metrics where it matters, like games and GPU testing. Its a consistent best seller because they've made it user friendly and desirable, a metric that can't be empirically measured.

Beats however, aside from its design, can be empirically measured by those that can perceive sound better than most. Its performance can be measured with equipment and more importantly, heard. As I've said, Beats is all marketing fluff. Endorse popular artists with their headphones that becomes nothing more than an accessory that adorns their necks and crazed fans will end up buying.

 

[smackababy]

As I understand it (and also mentioned in the article) it's mainly the Beats audio streaming service they're interested in. I've heard about it for the first time today, I have no idea how popular it is. Seems to me you could improve your own service quite a bit for 3.2 billion. Or just buy Spotify, might cost a bit more but at least in Europe it's by far the most popular streaming service.

Personally I will never buy anything with a Beats logo.

Also: how come Heineken is seen as some kind of premium brand? In Holland it's rated slightly above stale urine. Want a real good Dutch beer, search for Lindenboom or Hertog Jan (not likely you will find it but I did my duty).

Beats streaming service has never released their numbers, but it is rumored to have around 500,000 users. Spotify has around 4 million and Pandora has 250 million. I prefer Spotify over Pandora any day. And Beats music, which doesn't have a free component, I've tried and the only down side is really no dedicated PC app (plus, not being fee). If iTunes incorporated it into not only their PC app, but also their iOS, it will be pretty good for Apple users. iTunes Radio is awful.

 

[Oyeve]

Beats is perfect match for Apple for the obvious reasons.

 

[joshhedge]

"Better features" is subjective. They've had the best GPU performance and color gamut for a long time and there's no 4-inch phone that can touch it in CPU performance or battery life.

There still isn't any phone of any size that can yet touch it's performance on a per-core basis, still smashing the quad cores out there. I think I'll be returning to iOS this year from a few years with HTC.

Anyway, I digress. I think this beats move, whilst a substantial sum of money if it doesn't play out, will work in their favor. Hopefully significant improvements to iTunes Radio (A name change would be a good start, iBeats perhaps) whilst also providing a basis for Apples wearable future.

 

[coffeejunkee]

Pandora has 250 million

Sounds like a lot for a service that's only avaliable in the U.S., Australia and New Zealand. Do you mean 25 million perhaps? Or are they still counting old accounts from the time they were available worldwide?

 

[coffeejunkee]

Pandora has 250 million

Sounds like a lot for a service that's only available in the U.S., Australia and New Zealand. Did you mean 25 million perhaps? Or are they still counting old accounts from the time they were available worldwide?

Can't comment on Beats streaming service since I haven't used it. But to me it doesn't seem too hard to set up a competing streaming service of your own. Make an app for iOS/Android/WP (easy part) then make sure you get more rights to music than the others (hard part, but should be easier for Apple considering the relation they already have with publishers).

 

[Rakehellion]

Sounds like a lot for a service that's only available in the U.S., Australia and New Zealand. Did you mean 25 million perhaps? Or are they still counting old accounts from the time they were available worldwide?

A Google search reveals this from last year:

"After 8 years in business Pandora has 3 million paying subscribers and 68 million non-paying listeners in the U.S. The company is still not profitable. The stock trades at 95 times next year's earnings.

In our 3-year growth projections we either run out of potential customers (not enough people in the U.S.), or we have to factor in a dramatic unprecedented increase in advertising rates. Even if the company increases its revenues per non-paying listener by 136 percent and more than triples its paying subscribers, it needs to grow to 278 million non-paying listeners to justify its current valuation."


On Pandora's website, they say they have 250 million registered users so not quite the same thing.

Can't comment on Beats streaming service since I haven't used it. But to me it doesn't seem too hard to set up a competing streaming service of your own. Make an app for iOS/Android/WP (easy part) then make sure you get more rights to music than the others (hard part, but should be easier for Apple considering the relation they already have with publishers).

Getting the licenses is the hard part, so I'm guessing Beats completes Apple's piece of the puzzle. Beats Music and iTunes Radio are both brand new services less than a year old, which leaves us to speculate how they'll change the market in the future.

 

[coffeejunkee]

3 million paying subscribers seems more reasonabe. 68 million non-paying is a lot too, but I suppose anyone who ever made an account and listened for a few minutes before thinking 'nah not gonna use this' is counted.

Still, I think it's safe to say streaming services are the future. But someone's gonna have to give, either the music labels/artists, the service provider or the consumer.

Anyway, if it's just for the headphones, you have to sell a lot of them - even if they're overpriced garbage - to recoup 3.2 billion dollars.

Also, I know it's a cruel world but it still makes me sad. You have all these manufacturers pouring blood and soul into their products making fantastic high-end audio equipment, but who gets the billions? The one who pumps up the bass through the roof. Might be fitting though, it's the same for the music industry itself.

 

[Rakehellion]

Also, I know it's a cruel world but it still makes me sad. You have all these manufacturers pouring blood and soul into their products making fantastic high-end audio equipment, but who gets the billions? The one who pumps up the bass through the roof. Might be fitting though, it's the same for the music industry itself.

99% of music listeners are not sound engineers or music PhD's. "Better" sound quality is pointless if it doesn't meet your customer's needs.

The same arguments are made against the Mac by idiot savants who know all about technology but little about anything else.

Though I've never used a pair of Beats and can't attest to their quality.

 

[HeXen]

Everyone knows mainstream audio hardware will always get flack. We see it in car audio, home audio and of course portable audio. Audiophiles are hipsters, don't try to lie. If beats HP's only costed $40, they never would have made a dent in the market. If they sold for $100 and was never marketed nor had Dr Dre, they would be on par with Audio Technica's or whatever the flavor of the year is. Now if AT, Grado or any other non mainstream company turned their HP's in a marketing machine with a famous face then they would "suck" and sound terribad cause that's how hipsters roll.

Terrible acquisition by Apple, if its for their knowledge in making good sounding headphones. Beats headphones are 95% marketing fluff and 5% substance. I don't proclaim to be an audiophile but they are pretty bad, I've tried a store demo unit. This is of course having experienced hearing with Audio Technica M50s and AD700, which are mine.

They are indeed popular but that's only because there's a ton of its cheap imitation in the market and not surprising since its terrible sound isn't that hard to replicate.

It cannot be compared to the iPhone in any way. Apple products are expensive but they do deliver the quality that you'd expect. Beats headphones however, look great but doesn't perform as well as its price tag.

Tries store demo unit....is now professional opinion :thumbsup:

 

[JackBurton]

The iPhone was never (except, at inception) the highest performing or best smartphone. There are plenty of others that are more powerful, have better features, and such. However, the iPhone is a consistent best seller. You don't see Apple commercials making fun of Samsung's new phone.

Wrong. Just about every time Apple releases an iPhone it destroys the competition performance wise. The A7 chip was just nasty. It was above and beyond faster than anything on the market, WITH a very efficient use of power.

As for Apple not making fun of Samsung, it's because they aren't going to give them free advertisement. Samsung on the other hand loves talking smack about iPhone in their commercials because it only helps them in sales. Everyone already know what an iPhone is, not everyone know what junk phone Samsung is selling this week.

But to get to the original topic, I think it is a dumb move for Apple to purchase Beats. Horrible acquisition. Apple should have focused on their B&W line of headphone. Way more respectable than Beats. I would think Beats would be a better pairing with Samsung. Low end crap.

 

[Rakehellion]

But to get to the original topic, I think it is a dumb move for Apple to purchase Beats. Horrible acquisition. Apple should have focused on their B&W line of headphone. Way more respectable than Beats. I would think Beats would be a better pairing with Samsung. Low end crap.

Apple isn't a headphone maker. They have one model and it's bundled with all of their devices. The acquisition was most likely for the Beats Music service, but it'll be interesting to see how this changes iPhones.

 

[JackBurton]

Apple isn't a headphone maker. They have one model and it's bundled with all of their devices. The acquisition was most likely for the Beats Music service, but it'll be interesting to see how this changes iPhones.

Beats is not a respected brand (popular, but not respected) and doesn't go along with Apple's image which is quality and innovation. They would have been better off promoting B&W or B&O. That would fall right inline with their image. Again, Beats would make more sense on the Samsung side, plasticy, low quality crap.

 

[Anteaus]

I'm normally don't generalize but I will in this case. Beats is about style and name recognition, and that is what Apple purchased. Odd as it sounds, there are still market demos that Apple still haven't exploited, and this acquisition helps them do that. Beats' headphones are marketed as style accessories first and foremost. I'm sure they sound decent in their own right, but they aren't really meant to compete with quality headphones. They just need to sound "good enough" to make people not puke over the price. For many including the hipster crowd, the iPhone can be seen as an accessory also. Functionality wise, it is my opinion that some competitors have not only matched iPhone capabilities and in some cases surpassed them. This acquisition makes sense, but for the money Apple paid the value isn't as obvious.

Ironically, this is actually how I feel about Bose. Decent enough but grossly overpriced.

 

[Eug]

^^^ This is how I feel about B&O. B&O isn't actually about quality. It's decent enough, but it's really mainly just about image.

 

[Carson Dyle]

WTF did they buy? A (crappy) headphone brand? Or was it the Beats and MOG music services? MOG was purchased by Beats for just $10M.

I don't get it.

 

[joshhedge]

WTF did they buy? A (crappy) headphone brand? Or was it the Beats and MOG music services? MOG was purchased by Beats for just $10M.

I don't get it.

MOG may have been purchased for that amount, however it was Jimmy Iovine who was able to secure the licensing contracts, and I believe that is where the money lies.

 

[Carson Dyle]

MOG may have been purchased for that amount, however it was Jimmy Iovine who was able to secure the licensing contracts, and I believe that is where the money lies.

That's not unique. Pandora, Spotify, Rhapsody and other streaming services don't have similar contracts in place?