Beats, By Apple?

It’s rumored that Apple is considering shelling out upwards of $3 billion to acquire Beats Electronics, which, in addition to its ubiquitous headphones, runs a music streaming service. Bob Lefsetz doesn’t see the point:

Tim Cook is an operations guy, he’s clueless, the company has no vision and this is evidence of it. Steve Jobs was famous for saying one thing and doing another, decrying this and then doing exactly that. Anybody with a brain knew that streaming was eclipsing downloads. Except at Apple, where they were adhering to Jobs’s philosophy. But it turns out Apple had no Plan B, no streaming service ready to be launched when necessary. It’s like they never read Clayton Christensen’s “Innovator’s Dilemma,” despite it being vaunted in the tech press for over a decade. If you rest on your laurels, you’re gonna be history tomorrow.

Derek Thompson, on the other hand, thinks buying Beats would be a smart move:

What’s iPhone’s Next Little Thing? Why not: the most popular premium headphones in the world (plus a promising streaming service)?

Headphones? Sure, headphones. Besides clothes, there are five things on my person each time I step out of my apartment: keys, wallet, watch, phone, and headphones. Apple already makes a best-in-class phone and is working on a best-in-class connected watch. But for reasons I won’t even guess, it makes weirdly fragile plastic headphones. Owning the most popular premium headphone manufacturer means Apple is an iWatch away from producing the top high-end version of just about everything I carry around with me when I walk, besides a wallet (which is going to the cloud anyway) and keys (which, who cares). The implications of dominating the high-end ambulatory consumer market in a world where everything is going to mobile seem profound.

Joshua Brustein puts the potential purchase in perspective:

Apple wants to build the best version of whatever device people start using next. If it decided that it wanted to do that through acquisitions, it would likely spend a few billion dollars on, say, the purchase of Fitbit in order to go deeper into wearable computers. Or Apple could make the same bet by scooping up a bunch of engineers from Nike’s defunct FuelBand division.

But Apple hasn’t shown much interest in buying its way into the future. Even if it does spend big on Beats, Apple will look pretty much the same at the end of the day.

Gorby argues that there’s “one good idea in the Apple-Beats deal: and that’s making big acquisitions”:

Beats’ main asset is it’s brand. It’s got a great brand, and it’s a great business success. That’s how it can sell mediocre headphones and make fat margins. Again, more power to them. Great. But Apple is a one-brand company. Its strength is its brand. Taking on a new, separate brand makes absolutely no sense. And if Apple wants to fold Beats into its brand, why buy them in the first place? Why not just make its own headphones. …

The technology landscape changes extremely fast, let’s face it Tim Cook is not the visionary that Steve Jobs was, and Apple has $100 billion in cash that it just doesn’t know what to do. It should make very big acquisitions. Just not Beats.