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The Critical Path #117: Why Did Apple Buy Beats?

Horace talks about CapEx and begins unpacking the massive topic that is The Capitalists Dilemma. We focus on the surprisingly under-discussed data with regard to Apple’s acquisition of Beats. The deal was officially announced within hours of this recording.

via 5by5 | The Critical Path #117: Why Did Apple Buy Beats?.

  • Cogito

    Refreshing to hear intelligent analyses of (then rumored) Beats deal after reading hundreds of ‘stereotyping’ comments from supposedly ‘liberal minded’ Tech Bloggers.

    • Moisés Chiullan

      Exactly! The coded language from so many “progressive” tech bloggers on this has been infuriating.

  • berult

    Buzz-rebranding, fuzz-revamping of the iEconomy. Guise-wise…more liberal-arts brush, less technophile gush.

    Iovine’s wrap-up comment in yesterday’s re/code interview:

    “Any team that loses its point guard needs to bring new people in. Angela Ahrendts from Burberry is amazing.”

    Sure is, but don’t you sell Dre and yourself short Jimmy…!

    berult.

  • hannahjs

    At long last, the boring previous consensus narrative, “Alas, Apple mojo has vanished,” has been scrapped in favour of a fresh storyline. Can’t wait to see how this new story ends.

  • elpolodiablo

    I really think they stated very clearly why they bought beats in the re/code interview. I believe since the introduction of digital music in the late 90s to early 2000s, the business model has flipped where the artist and music industry were making most of their money of album sales, now they are making more money of concert sales and sales of shirts and other paraphernalia, the dilemma has been that success of iTunes and digital downloads has hurt the creative process of making an album. In the interview Iovine said that the artists would take a year off to create the music for the album. Now they just make rushed songs on the road while on tour. If apple and beats can engineer a process where music creation can be profitable through streaming you create a new market

  • stefnagel

    Good related article on NPR. Search With Beats, Apple Buys A Quick Start On Smart Headphones.

    Very likely Apple sees Beats Music as a footnote, a clause in the agreement. Tunes, games, shows, books, apps—public content was king.

    That king is dead.

    What’s next? Private content. Selfies were the first hint. Our health, wealth, relationships, careers are the new content. Now we are the content.

    The next wave in consumer tech is nearables (sensors that gather information around us) connected with farables (servers that give information context and depth), connected through hubbles that control the flow and keep info secure.

    Security, confidentiality and privacy will be the next battle. Search ios security 446 gibson.

  • Sacto_Joe

    Off Topic, but I thought people might like to know:

    Fortune’s Apple 2.0 is apparently dead. All you get when you try to go to the old link is an archive of the old stories – minus ALL of the old comments.

    However, PED is still posting on Fortune, and you can go to the Apple section with the following url:

    http://fortune.com/tag/apple/

    • modal window

      super sad if this is true. only reason i frequented cnn money was to read his blog and the comments from faithful contributors such as yourself.

    • Sammy

      “why i boroke up with apple” (that’s how it copies now in mobile safari, rather than the real URL, like the old site) – a fortune hit piece (by david.goldman@turner.com , not by PED) right before the website change, right before WWDC.

      We stopped subscribing (physical and online) to Forbes when the online version started sucking, and now Fortune is doing the same.

      Click bait journalism is going to win/die?

  • BaltimoreDave

    Is there any chance Apple bought Beats to prevent Google or someone else from having them? I still cant fathom this being a 3 billion dollar deal.

    • Sammy

      Many reasons:

      Of course it was to prevent Google or Samsung from buying a Spotify competitor with incredible music industry experience and connections.

      It’s also better to buy now for $3b than next year for $10b.

      It takes a potential great competitor off the market and in-house. If you have the time to watch last year’s and this year’s Iovine interviews with Walt and Kara, you’ll understand that Iovine is a visionary in the music industry.

      For Apple, it’s another brand to own that already has apps on Android and Windows Phone. Why waste the time (most important) and money (less important) building iTunes on Android and Windows Phone?

      Another news release just around the time of your post, a MFi specs for a lightning port connected headphones. This means apple is developing a data interconnection between your headphones and your iOS device.

      Think – when exercising, your headphones are reporting your heart bpm to your healt app on your iOS device.

  • santoscork

    I felt from the beginning that the purchase didn’t represent value for Apple. I saw beats as simply expensive, trendy, low quality phones. I really thought dr dre’s comments on YouTube representing a simple money grab but much less. I thought it was not going to happen.

    After the recode interview a lot was revealed. I have a lot of respect for the acquire now. I feel Jimmy Iovine is an amazing fit for Apple’s music and entertainment properties. He is very smart, engaged, has a long history and interest in iTunes and music players and an influential leader. I think he can deliver tremendously focused value and be a magnet for new talent while participating in well thought out services and strategy for Apple’s iTunes and beyond.

    As Apple further develops iTunes Radio, Apple TV, iTunes, iPods, iTunes music and perhaps wearables, Iovine has a lot to offer. He is made for the job and with Apple’s capital, having had a strong relationship with Steve Jobs and Apple for around a decade, I think we may see some very focused interesting and focused gains.

    Overall, I think it’s a winner.

  • http://fakeapple.com Fake Tim Cook

    I believe Apple will use it’s experience in Retail to create a chain of Beats retail stores.