A couple of weeks ago I mentioned the Apple purchase of Beats Music which, as you will no doubt recall, was coming in at about $3 billion. Most of the Apple news so far this week has been on the back of the developer conference and, in particular, Monday’s keynote address which touched on iOS8, iPhone 6 and the new language, Swift.
While all this has been going on, sitting quietly in the background minding its own business, has been the Beats deal. What has Apple actually picked up in this monster deal? Looking in from the outside Apple has its own radio streaming offering and a headphone deal in place, but Beats brings a number of very smart and strategic elements to the table.
Apple is a big time, influential player in the relatively new wearables game and although we’re yet to see anything really come to market, Beats brings headphones as a fashion item to the world and this could be just the extra piece Apple needs to feel they can firmly establish their brand as street fashion alongside tech fashion.
Additionally, Beats had an uncanny knack of taking their streaming service’s free-trail users and turning them into ever illusive subscription revenue. The Beats service is pretty new but there are a significant number of users paying to download the Beats app from the App Store, so rather than them keep just 30% of that money, Apple now has the full amount going into it’s bank.
Talking of banks, that $3 billion or so that Apple splashed out on this deal hardly scratched the surface of their nearly $160 billion cash pile. Although, I think a commentator had described Apple as having “taken a financial hit” on the deal — I wouldn’t mind a taking a hit like that.
The last piece of this smart strategy pie, comes in the shape of Messrs, Lovine and “Dre”. These are the guys who “are” Beats Music and they will be joining the Apple family to help guide their baby on its next steps under the Apple umbrella although it is reported that Beats will remain a brand in its own right.
But, if the two of them weren’t to join Apple as part of deal, how successful do you think the integration of Beats into the Cupertino stable would be?