Apple's Beats: Maturity or Mistake?

By

Apple is reportedly going to buy Beats for $3.2 billion.  Depending on how you view it, this is a great move or a bad mistake.  I'm thinking Apple is finally hitting middle age by having to purchase the audio hardware and music streaming company.

I confess I'm a little stunned at $3.2 billion for a company that produces headphones, speakers, and offers a subscription music service. It's the largest purchase Apple has ever made and the most significant brand since buying NeXT to get Steve Jobs back into the company. Everyone else has been small and relatively low-profile companies that integrate into the larger whole.

Beats is the first name brand Apple has effectively purchased and will attempt to integrate into the company as a whole. Certainly Beats has the upper-end hardware cachet that Apple loves to cultivate for its own image, but opens questions if Beats will keep its brand and continue to offer its technology to other hardware manufacturers.

Beats Music seems to be the key to the acquisition, since Apple has not done well with bootstrapping its own music subscription service to match Spotify. The irony here is people have been more comfortable with video streaming services, such as Netflix, with music subscription starting to impact traditional downloadable music via sources like iTunes. Last year, downloads fell 2 percent while music subscription revenue increased by 50 percent to $1.1 billion, according to a report by the global music industry association.

It is too soon to tell if this is a mistake. Certainly, it is one Apple can afford with over $150 billion in cash lying around. And in today's Cloud as a Service marketplace, a consumer subscription service generating monthly recurring revenue is something to love if Apple can crank its marketing mojo.

I view Apple's purchase of Beats as a sign of maturity.  Rather than try to perfect a streaming service in-house as would have been traditional under former CEO Jobs, company management has taken a more conservative path by simply buying a solution for its streaming needs.  While there will be challenges in messages and marketing, those pale behind having a ready-to-market offering with an established name brand. 

About the only caveat here is how well Beats and Apple management will play together. If Beats is left alone with nothing more than an occasional nudge from the Apple mothership when it comes to hardware design and branding, I think the merger will work well. Should Apple become too heavy-handed, the results could be ugly and cause considerable damage.




Edited by Rory J. Thompson

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Coding and Invention Made Fun

By: Special Guest    10/12/2018

SAM is a series of kits that integrates hardware and software with the Internet. Combining wireless building blocks composed of sensors and actors con…

Read More

Facebook Marketplace Now Leverages AI

By: Paula Bernier    10/3/2018

Artificial intelligence is changing the way businesses interact with customers. Facebook's announcement this week is just another example of how this …

Read More

Oct. 17 Webinar to Address Apache Spark Benefits, Tools

By: Paula Bernier    10/2/2018

In the upcoming webinar "Apache Spark: The New Enterprise Backbone for ETL, Batch and Real-time Streaming," industry experts will offer details on clo…

Read More

It's Black and White: Cybercriminals Are Spending 10x More Than Enterprises to Control, Disrupt and Steal

By: Cynthia S. Artin    9/26/2018

In a stunning new report by Carbon Black, "Hacking, Escalating Attacks and The Role of Threat Hunting" the company revealed that 92% of UK companies s…

Read More

6 Challenges of 5G, and the 9 Pillars of Assurance Strategy

By: Special Guest    9/17/2018

To make 5G possible, everything will change. The 5G network will involve new antennas and chipsets, new architectures, new KPIs, new vendors, cloud di…

Read More