Apple is showing a weak hand with the talk about buying Beats Electronics, LLC, which has HTC Europe and Carlyle Group as their top investors. Initial commentary focused on the headphones, a quality of which will never match Bose in my opinion. There’s a reason Chrysler was in talks with Beats while Mercedes was in talks with Bose. And guess who drove a Mercedes? Steve Jobs.
Beats Electronics has more to offer than headphones in the future but let’s touch on the headphones first because that’s the brand and Bloomberg has commented that Apple is “buying the brand, not the technology”, which means merely the design because there is only so much that can be done with the actual sound anyways. Ear drums can only detect frequencies between 20 hertz (20 vibrations per second) and 20,000 hertz, something Bose has already perfected and set the standard for.
Beyond the face value, Apple appears to be going after the future distribution abilities offered through the community operated by Beats LLC subsidiary MOG Inc, company tear sheet here . Aside from MOG, Beats is working on a project called Fusion and an alliance with MINI (both documents embedded below) to distribute their music. This is designed to revive the fairly sleepy iTunes market.
Instead of resizing their old technology like they did with the iPad and iPad Mini from the iPhone they are redesigning their old library distribution platform iTunes through the purchase of beats instead of using their innovation capabilities like they did when the music industry was changed by them back in 2007.
The hype and the story may be exciting as certain slide-show websites like to claim but the underlying reality here is that Apple is fresh out of ideas and is willing to spend $3.2 BN to buy a brand instead of investing in R&D to own a patent on something original and new (and Apple is well-known for patenting things).
