
Dr. Dre Appears to Confirm Apple-Beats Deal in Facebook Video - bjansn
http://thenextweb.com/apple/2014/05/09/dr-dre-just-confirm-apple-buying-beats-3-2-billion/
======
kyro
While this makes little sense on the surface, I suspect the folks at Apple are
far from stupid. There's likely a solid reason behind this move, and instead
of doing the easy thing by saying "b-b-but their headphones are crap!", it'd
be more productive to explore the underlying motives.

I actually think this is a smart move. Beats first and foremost is a _fashion_
company. The majority don't buy Beats for sound quality, but for the style and
image. I see people wearing Beats in all sorts of colors every day on the
train. NBA players are seen sporting them at practice or in the locker room.
It has become _the_ fashion icon for audio-wear. In the context of Apple's
recent fashion-binge with hires from Burberry and YSL, this move may provide
further evidence of Apple creating/entering the wearable-tech fashion market.

This could also be a response to Apple losing ground in music streaming. Rdio,
Spotify have become the default source of music for so many, I wouldn't be
surprised if Apple has seen a hit to their music sales. They also botched
social music up with Ping, which is an area the aforementioned services are
doing pretty well in. Beats may have the connections, the brand and marketing
capital, to help make Apple a formidable competitor in this area. But I read
here yesterday that the Beats streaming service only has 200,000 low-quality
subscribers (ie they joined because their phones came preloaded with the
service), so I'm less inclined to believe Apple dropped 3.2 billion on them
for this alone.

Maybe it's a combination of both, or for a different reason altogether. It's
intriguing, nonetheless.

~~~
wiremine
> Beats first and foremost is a fashion company.

This is the key. I would add it isn't just a fashion company, it is a
_premium_ fashion company. I did a quick look at Amazon [1], and the price
points are fairly solid: $99 to $299 for over-the-ear headphones, and around
$45 for the in-ear models.

I doubt Apple could get away with this level of mark-up if they entered the
headphone space. They have a solid markup on their accessaries, but I doubt
the margins are similar.

Taking a step back, I wonder what Angela Ahrendts [2] is going to do with this
brand. Is the beats brand part of their iWatch strategy?

[1] [http://www.amazon.com/s/ref=nb_sb_ss_i_0_5?url=search-
alias%...](http://www.amazon.com/s/ref=nb_sb_ss_i_0_5?url=search-
alias%3Daps&field-
keywords=beats%20by%20dre&sprefix=beats%2Caps%2C214&rh=i%3Aaps%2Ck%3Abeats%20by%20dre)

[2] [http://www.apple.com/pr/bios/angela-
ahrendts.html](http://www.apple.com/pr/bios/angela-ahrendts.html)

~~~
pilsetnieks
Ahrendts will be selling its products, considering that she's managing retail
operations.

Paul Deneve[1] (ex-YSL CEO) might do something with it.

[1] [http://www.businessweek.com/articles/2013-07-03/apple-
hires-...](http://www.businessweek.com/articles/2013-07-03/apple-hires-a-
fashion-ceo-but-he-wont-design-iwatches)

~~~
wiremine
> Ahrendts will be selling its products.

Maybe, but that is sort of like saying Phil Schiller is _just_ going to market
them. I always remember this post from Daring Fireball about how integrated
Apple is:

[http://daringfireball.net/linked/2012/10/29/whither-
phil](http://daringfireball.net/linked/2012/10/29/whither-phil)

------
loso
Really weird to see the intersection of hip hop and tech on HN so much this
week. I love it.

I understand why Beats are popular. They sound great with bass driven music.
Its like when people put Bazooka sub woofers in their cars in the 90s. Yeah
audiophiles and older people hated them but they sounded great with bass
driven hip hop.

I still haven't figured out Apples play here. I'm starting to think its a best
of both worlds with the earphone tech and the subscription services. I think
they wanted them both equally hence the huge number.

------
digitalengineer
After two years and spending 300 million for a 51 percent stake, HTC sold
their (now) 25% stake for just 265 miljoen. And a year later Apple buys it all
for 3.2 billion. Wow... (edit: spelling)

------
iambateman
Beats headphones are crap, sure. And their streaming service isn't as mature
as Spotify. But _three billion dollars_ isn't about headphones or online music
streaming or Dr Dre's drunken celebration. It's about growth.

Apple has a chokehold on the iPod market. They've rocked the market with the
iPod, iPhone, iPad and those products will be cash cows for a long time. But
where is their next growth going to come from? A watch? I doubt it.

All the granola 16-year-old white girls already have their iPhone. There's
_no_ room for crazy growth among middle class white people. Apple needs to use
it's expertise to pursue new markets, which is exactly what they're doing.

Tim Cook isn't afraid, he's strategic. Beats by Dre is a high-end consumer
lifestyle brand that GREATLY appeals to black, hispanic, urban-context, young
men and women. They sell expensive products. They care about design. They
represent a way of living. They're Apple in another market.

Beats is about to be Apple's international foray into a completely new growth
segment. And it's genius.

------
Thriptic
Maybe when Dre is an Apple employee they can force him to finally release
Detox ;p

~~~
jordanthoms
Yeah, but Jony Ive is gonna design the cover.

------
AlexMuir
All FB and Instagram content seems to now be deleted. Probably learned from
50cent's Twitter stock-ramping faux-pas a few years ago [1]

Probably makes it more likely to be happening.

If true, this makes sense framed as an acquihire.

$3.2bn to bring in Dre, a music industry genius and Jimmy Iovine, a highly
influential label boss. iTunes is at risk of aging - kids' parents use it. It
may be that Apple recognises the need for a brand for a younger, cooler
audience who don't want to buy an MP3 file. Apple has the money but pulling
labels (and artists) over to a viable subscription business model is going to
take clout, influence and reputation.

I expect Dre will shortly be rapping about his unforgettable journey.

[1] [http://www.theguardian.com/business/2011/jan/11/50-cent-
ramp...](http://www.theguardian.com/business/2011/jan/11/50-cent-ramps-stock-
on-twitter)

~~~
prawks
> iTunes is at risk of aging - kids' parents use it

An angle I didn't originally think about, but I think this is a big one. Apple
has seen how Facebook has aged, and may be trying to avoid the same thing.

------
kevin818
This is big. Although to be honest I'm still trying to understand how a
company that sells quality stuff is buying the headphones that most
audiophiles think is meh.

Is all this really just for the name?

~~~
wging
This confused me too, but the quality of the headphones that come with Apple's
products is not reputed to be great either. (I can't say whether this is true.
Hearsay at best.)

~~~
CodeWithCoffee
The old Apple headphones were average (for their price), but overall the newer
EarPods are much, much better.

------
kitsune_
This is boggling my mind, it surely can't be about quality. I bet Apple could
have bought AKG, Audio Technica or Beyerdynamic for less than 3.2 Billions.

~~~
onedev
Which one of those companies commands 59% of the headphone market over $99,
did $1 Billion in revenue last year, and has sky-high margins and gets mass
market consumers to pay top dollar for headphones?

Exactly.

~~~
johnward
it's about the brand and the beats brand is strong.

------
imjk
I can't believe no one has yet mentioned that Samsung just last week announced
that they were entering the "Premium Mobile Audio Products" market. This
likely has nothing to do with Beats' crappy streaming music software, and more
to do with holding market share in Apple's main niche: fashionable hardware.

------
pbhjpbhj
When I see someone wearing Beats I think "there's someone who overpaid" \-
those are the people Apple want to continue attracting, I guess that's behind
this? But the price, seems steep.

~~~
stackcollision
You don't need to be overpaid to buy expensive image-"enhancing" crap, you
just need to be very stupid about managing your money. I see plenty of people
on the subway wearing Beats who don't look like they could buy their next
meal. I'm sure there is at least one person in the world who has spent money
from their third mortgage on those things.

------
Kudos
The video in question skipped ahead to the important piece
[https://www.youtube.com/watch?v=guMFKBXp544#t=46](https://www.youtube.com/watch?v=guMFKBXp544#t=46)

------
sarreph
Not only is Dre the first billionaire in hip-hop, but also the first rapper to
(unofficially) announce a multi-billion dollar acquisition with such swag.

------
steve_benjamins
Videos like this should become standard for any major SV acquisition!

~~~
imjk
For a long time, people carrying Macbooks were seen in the same light as those
that are seen wearing Beats headphones: suckers who bought over-priced
(ostensibly premium) commoditized hardware with superior marketing. Perhaps
these companies aren't so different.

