Will Apple have to write down Beats acquisition?

[Rogifan]

Saw this thread on Twitter. Don't know who @moible_reach is but he seems to be in the know. Follow his Twitter feed and he claims Apple overpaid 3-4x for Beats, didn't get the licensing deals they wanted and that they're losing money on Beats 1 radio. Also claims they didn't use a bank to evaluate the Beats deal and $3B price tag and if they had the bank would have said no.

I'm still trying to figure out what Apple got from the Beats deal. I keep hearing people say a profitable headphone company but if that's the case why do we have AirPods? Why aren't Beats branded headphones packaged with iPhones? How many legacy Beats employees are still at Apple. Doesn't seem like they paid for high quality talent. So what was the acquisition for other than Apple was getting pressure because it has all this cash and Wall Street and others wanted them to do something with it. But still why Beats? Jimmy Iovine did that good of a snow job on Eddy Cue?

 

[I7guy]

Sometimes the fruits of an acquisition aren't evident for many years.

 

[Zirel]

"My uncle from Apple board"

You are giving what those guys want: attention.

 

[maflynn]

Sometimes the fruits of an acquisition aren't evident for many years.

Or ever, which may be the case here. Apple over paid and got little in return

 

[RedOrchestra]

That acquisition was all about Cue wanting to be cool and hang with the bros.

 

[I7guy]

Or ever, which may be the case here. Apple over paid and got little in return

Seems there was some brand recognition involved. I don't know if apple deems that important or not.

 

[maflynn]

Seems there was some brand recognition involved. I don't know if apple deems that important or not.

Perhaps, but given the price there ought to be more then brand recognization.

Take Star Wars, that was sold for 4 billion and we see Disney leveraging not only the brand (Star Wars themed attractions in their parks), but also merchandise, and movies.

Beats, don't see too much action taken to monetize the brand or leverage the name to increase profits.

 

[Rogifan]

Seems there was some brand recognition involved. I don't know if apple deems that important or not.

My opinion is Apple wanted a quick entry into the streaming market and Jimmy Iovine did one hell of a snow job on Eddy Cue. Tim Cook and the board signed off on it because there was a lot of pressure from Wall Street and others for Apple to spend some money and finally do a big deal.

As time goes on though it Apple doesn't seem to be doing much with the Beats brand. And apparently still not completely integrated into Apple. Why would Apple make something like AirPods? Why not integrate that tech into a new line of Beats hardware? Also there is no evidence Beats 1 is successful (the tweeter in my original post claims Apple is losing money on it). Even Apple Music in general seems to be coasting and successful mostly because of the power of defaults not because it's a superior service. How many subscribers would AM have if it was a stand alone app not pre-installed on every iOS device and other music apps had access to the Siri API?

 

[Adam Warlock]

Why would Apple make something like AirPods? Why not integrate that tech into a new line of Beats hardware?

No idea whether or not Apple will need to write down Beats, but I imagine the reason they keep two distinct lines of headsets is they target different audiences.

 

[Rogifan]

No idea whether or not Apple will need to write down Beats, but I imagine the reason they keep two distinct lines of headsets is they target different audiences.

And Apple couldn't keep distinct lines under one brand?

 

[Adam Warlock]

And Apple couldn't keep distinct lines under one brand?

I think each brand is already well established with their respective markets, and so bringing them together under one brand means the other loses out. I'm only guessing here as I'm not a marketing expert, but I imagine Beats appeals to the 'urban' market whereas there is a certain snob appeal to the Apple name, at least as far as people who care about that sort of thing goes.

 

[Galacticos]

I remember reading in a few different places at the time that a big reason, if not the main reason, Apple were keen on beats was dr dre and his music industry connections.
My guess would be that they thought they were paying for goodwill (a 'cool' brand with 'cool' people running it) but it just hasn't returned anything like what they thought in 'street cred'. A move that was supposed to say more about the brand than being sound business (virtue signalling)

 

[Rogifan]

I remember reading in a few different places at the time that a big reason, if not the main reason, Apple were keen on beats was dr dre and his music industry connections.
My guess would be that they thought they were paying for goodwill (a 'cool' brand with 'cool' people running it) but it just hasn't returned anything like what they thought in 'street cred'. A move that was supposed to say more about the brand than being sound business (virtue signalling)

Then Eddy Cue is a fool. Beats wasn't an up and coming brand it was a brand at its peak arguably on a downward trajectory. A brand that was popular because of celebrity/athlete endorsements not actual product quality.

Honestly if I was Tim Cook I would strip all of the cloud stuff from Eddy Cue, move him to LA and have him exclusively focus on TV and Music. Poach someone good from Amazon, Google or Microsoft to run iCloud, Maps and Siri.

 

[Galacticos]

Then Eddy Cue is a fool. Beats wasn't an up and coming brand it was a brand at its peak arguably on a downward trajectory. A brand that was popular because of celebrity/athlete endorsements not actual product quality.

Honestly if I was Tim Cook I would strip all of the cloud stuff from Eddy Cue, move him to LA and have him exclusively focus on TV and Music. Poach someone good from Amazon, Google or Microsoft to run iCloud, Maps and Siri.

Yeah I agree. Beats didn't stand out in anyway. I really think whether conscious or not they bought it because it was a trendy thing to be associated with (one might argue Apple customers have been doing this lately)

 

[thats all folks]

Beats was a brand for children. Fast fashion. Famous for being famous. Apple is Apple. putting the two together in one box would have been a very mixed message.