Earlier today, Business Insider did an interview with Kara Swisher and me about our new website and conference. As part of the discussion, Jay Yarow asked me about Apple and its rumored purchase of Beats, the headphones and online music company.

It caused me to think a little bit more about the company. So, even though these are just off-the-cuff remarks, I am posting that part here in its entirety, starting with the question of why Apple might be making such an acquisition:

If it’s true, I think that there could be a number of reasons for it. One was they just felt that it was the quickest way for them to get into streaming. Another is that Beats makes premium products in an area where Apple doesn’t make premium products. They are a premium-product company, but those are obvious.

The less obvious things are injecting creative talent into the company, if it is indeed true, as it’s been rumored, that [Beats'] Jimmy [Iovine] and Ian [Rogers] are coming over. I know Jimmy and Ian pretty well, and I think the more creative talent they can get in there — given their history and what people look to them for — they’ll be not only in music but in other areas like television and video. I guess that’s my gut reaction as to why they might be doing this.

I don’t know. I don’t know what [Apple CEO Tim] Cook’s judgment is about the people they have there now. But the people they have there now are the people who were with Jobs when he did the various creative things, iTunes and all that other stuff, over the years.

But look, Apple is going through a reset. There’s just no way around it. It’s not necessarily a bad thing. But it was forced on them by somebody dying who was an extraordinary figure, so they’re going through a reset. You can see how they chose to run their store. Somebody who turned out to be the wrong person. Now they went to somebody who knows a lot about fashion and style. It wouldn’t be surprising if they thought that they needed to build up this creative part, too, without necessarily feeling like anyone else was inadequate.

But I do agree that Apple needs to get better in the cloud. Apple very deliberately — and this was very much Steve Jobs’ point of view — Apple has concentrated its cloud efforts on being invisible. So in other words, stuff just would sync and appear. You change your contacts on one of your devices and it would appear on all your devices changed. And, by the way, they were doing that before some of these other competitors.

But they have the point of view that they didn’t want to create a big Dropbox-like repository in the cloud. They may have to change that, because I think people having a visible sense of where their stuff is in the cloud, of what to look for, matters.

There’s another area where they probably have to do something. They were early, and it was kind of cool with the Photo Stream, where every picture you took on your iPhone, which as far as I know is the most-used phone camera, or maybe any camera, at least in the developed world. And so any picture it took, as you know if you use their products, is sent to all your Apple devices. Well, there are two issues there. One is the limits on it. Other people have now taken the approach that they’ll match up everything in an unlimited way. So I think they have to change that.

Secondly, they need to go cross platform on certain things. In my opinion, they have an interesting decision — not unlike some Microsoft decisions that have had to be made — about whether something like FaceTime or something like iMessage wouldn’t be even a bigger deal if they worked on everybody’s platform. Those are all cloud things that they have to kind of figure out, get into order, and we’ll just have to see what they wind up doing.



5 comments
Superheterodyne
Superheterodyne

I'm inclined to agree with metadataqueen and phil28. I fail to see what Beats will bring to Apple. The only people who buy Beats products are young people who buy them as a status symbol. The products are all show and very little substance.

metadataqueen
metadataqueen

If Jobs were still around the deal with Beats would be off, given the loose lips.  


Apple has difficultly with the cloud because of their corporate culture of secretiveness, and their high level of dedication to consumer privacy.   What is hard to reconcile for me is while professional musicians use Apple computer products, they largely have deep distain for Beats headphones.


Streaming music is a commodity (despite no compulsory), and there is little money in it for musicians.  Moreover, when machines are making algorithmic decisions about what to stream, and when, great taste brokers and promoters like Rodgers and Iovine are less needed.   They need Dre to lead other musicians to the well.  But that well doesn't provide; Pandora doesn't make musicians rich.  


But if Samsung buys Spotify, than Apple needs their own streaming company.  And of course you are correct, Walt, Apple does need to be more cross platform.  Fans don't buy music based on what label they are signed to.  And Fans won't stream music from a service that doesn't have all musicians.  I think this is where the changes are coming.  


There is no Jobs to get musicians and their labels to sign up.   And entertainment companies are not going to roll over for a flat rate again.  Not when there are so many other great options out there.   Apple will need to start funding original content.  Like Amazon and NetFlix do, to their credit.  They get out their check books and take a risk on funding new content.  They understand that they must take on some of the risk, in the entertainment hits business.  Even Microsoft is trying. Napster never did.  And iTunes didn't either.  Ditto for Google!


What we see with this potential acquisition is Apple's burgeoning content play.  They will not get to just be the distributor, anymore.  They will need to create and pay for content for their pipes.



Nathen
Nathen

 "Secondly, they need to go cross platform on certain things."

Why would Apple want to go cross platform with, say, Android, when they know it is a completely fragmented OS. The outcomes would be either they provide their services only with the latest version of the OS (Android 4.4) and, given the percentage that this version takes in the share, a relatively small people would be able to get the services. Another result would be the desicion of Apple providing their services to earlier versions too, which would mean much more time in developing and we have to take in count that not all of these earlier devices are able to support them.

Either way, there would not be promisingly good outcomes on Apple's standards.


Apple's philosophy should be (and probably is) greatly improving their cloud and streaming services, making them real pull factors into their ecosystem. This avoids a cross platform mess. Let's not forget Apple is a vertical company.

@Chimala
@Chimala

By "..You can see how they chose to run their store. Somebody who turned out to be the wrong person..",  are you referring to Tim Cook?. 


In any event, history shows that hiring entrepreneurs thru acquisition, especially after making them billionaires, never works out. They stick around for the contracted period and get out.


Personally, I hope the strategy behind this is more for iTV than iTunes. Yes, iTunes and streaming will benefit but at $3+ billion expense it better deliver $30B value in the long run @@Chimala  

phil28
phil28

If I play a word association game, what's common between the two companies are "slick, beautiful, style, fashion, packaging, etc". What's opposite are "performance, honesty, seriousness, technology, etc.  As a result, and not being under 30, I think the Beats moniker degrades the Apple name. It may help them with the very young audience, but certainly not the serious computer market. 


It would make me reconsider Microsoft, perhaps because they would be considered the serious computing company. And, if you expect these two Beats executives will spend serious time at Apple in management positions, after collecting their huge windfalls, I think you're naive.


What's been disappointing over the past 4 years is an apparent inability for Tim Cook to move forward with much of anything.  Why should it take 4 years to do a phone with a larger display? Why do iPhone batteries still run out at 3 in the afternoon?, Why does Mavericks still not work well with Gmail?, Why are Apple maps still behind Google Maps? 


What's their biggest accomplishment over the past year? Changing fonts and colors in the iOS, and making their iPad thinner and lighter.  


Buying Beats will not solve this problem. They need a true product innovator, and that's not what the two guys from Beats will bring.

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