Conventional wisdom is that while Beats has a lot of fashion credibility, the actual audio quality blows. So why does Apple want to buy them?
Rumors have swirled that it’s an acqui-hire, and that Apple wants Beats so that it can also own Beats executive Jimmy Iovine and Dr. Dre, whose contacts in the music industry are unparalleled.
But there could be another reason, too. Apple might want to prevent Samsung from purchasing Beats.
According to well-placed source speaking to Techcrunch, rumors in Asia have suggested that Samsung attempted to buy the Beats brand only this year, only for the deal to fall through. It’s unknown if talks with Apple ended up killing that deal in the end, price negotiations, or if it was simply a fundamental incompatibility in the cultures of the two companies.
A Beats purchase certainly makes sense from Samsung’s perspective. Although the company has its own music service, it has so far failed to make a dent against Apple’s iTunes juggernaut. With Iovine and Dre’s music connections, Samsung would have a couple of silver bullet executives in the barrel of a gun aimed right at Apple’s heart.
From that perspective, it makes sense that Apple might want to buy Beats just to keep Samsung from getting the company first. Apple’s war chest is certainly big enough. The company has a $147 billion in its cash coffers, making Beats’ suggested $3.2 billion buying price a piddling amount in the grand scheme of things.
But would Apple really pay $3.2 billion just for a couple of key executives? Certainly, Tim Cook’s recent behavior suggests that he is pursuing a key strategy of hiring culturally aware, highly skilled, and sophisticated managers away from major companies, at any cost necessary. These executives include Burberry’s Angela Ahrendts, former Leica engineer Ari Partinenen, Nike’s Ben Shaffer, and former CEO of Yves St. Laurent Paul Denever. $3.2 billion might just be worth it to Apple if Iovine and Dre can lock-up another 10 years of iTunes deals for Cupertino… and make a streaming subscription music service, a la Spotify, finally happen.