There's Only One Good Idea In The Apple-Beats Deal

May 12 2014, 10:46am CDT | by

Let’s get it out of the way first: if the reports Apple are in talks to buy Beats headphones are true, it’s insane, and it probably casts a pall on all of Tim Cook’s leadership.

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.

If Apple wants to make its own headphones, why not (as far as wearables go, it’s not a bad idea, especially given Apple’s longstanding interest in music), but, again, even if that’s the case, the Beats acquisition makes no sense. There is actually one company that makes amazing headphones with very impressive technology. It’s called Parrot, it’s French, and it’s led by a technology visionary.

Some people say the Beats deal is not about headphones, it’s about Beats’ streaming service and technology. But it makes no sense whatsoever either. Yes, Apple should definitely have its own Spotify-killer. But, again, no need to buy Beats. Is it about record label deals? All streaming rights deals include clauses that moot them in case of acquisition. Is it about the technology? If Apple can’t build technology that Beats can, it’s in a much worse situation than any of us think.

There is, however, one good idea in the Apple-Beats deal: and that’s making big acquisitions. 

Apple under Jobs never wanted to make big acquisitions. But every once in a while a disruptive or amazing new technology comes along that simply makes sense to own. Nest, for example, really should have gone to Apple–the deal probably couldn’t have happened as a result of clashing personalities, since its founder Tony Fadell had left Apple in bad blood, although who knows, since that was long ago. But Apple was probably never in the running to begin with. This even though the connected home is probably a better driver of long-term growth for Apple than smartwatches (think of when Apple marketed itself as the “digital hub” of your life). Another deal that Apple absolutely should have done was Israeli Maps maker Waze, but the suitors there were just Google and Facebook.

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.

 
 

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