May 302014
 

So the other night I was pretty bummed about blowing the whole Beats acquisition thing. One of my good friends, @lophan, shot me a text to try and put it in perspective:

IMG_5178Slowly I realized: that was exactly it. Despite my disproportionately-high 4-letter word count, I do some serious legwork before releasing a post (spelling and grammar notwithstanding). Over the 5 years (!) I’ve been pushing this rock now, most of that time has been spent with Steve Jobs leading Apple, so I grew to look at the company the way Steve would. I make no claims about being able to channel the decision-making of the most influential tech CEO of all time, but the point is when you observe the world through a particular lens, sometimes when what you see isn’t what you expect, it might be time to change the lens. There’s a lot of anecdotal data about the kind of CEO Tim Cook is, and most of this data is qualitative and usually juxtaposed against “how Steve would do it.” Cook is accessible and level as a manager and steely and silent when faced with underperformance; Steve was mercurial 24/7. Cook is more responsive to media pressure than Jobs ever was. Cook made public some of Apple’s charitable endeavors, something Jobs would never do.

Now we know another major difference between the two: their attitude toward acquisitions.

Jobs was a legendary grass roots leader – his goal was to develop all the things that Apple did organically. I’m sure a large part of this was due to his history with “less than responsive” business partners like Microsoft and Adobe or companies that were have perceived to have slighted Apple – like Google. This complete control gave Jobs the advantage of having almost all of the user’s experience with Apple’s products succeed or fail because of what he could influence directly. It was also a decided advantage in leak control, lending that much more gravitas once the inevitable “one more thing” was announced.

Cook appears to have an opposite approach, and I’m going to go out on a limb and say I don’t mind it. He cited the 27 acquisitions Apple made in the last year when defending the Beats deal, which according to Wikipedia’s count, is about 50% of all the acquisitions Apple has made in its history. Whereas Jobs had a laser focus that allowed him to do everything within Apple, it appears as though Cook has a slightly wider focus that includes more acquired help. Jobs was (until shortly before his passing) always the one voice of Apple; Cook’s model gives as much if not more stage and press time to Schiller, Ive and Cue – and rising stars like Federighi. This democratization of success in an environment where every tech maker in the Valley is looking to snipe the hot company is much more healthy for Apple. Cook isn’t shy about cycling back and purging either – witness the Browett debacle or the Forstall ouster.

I’ve admitted I don’t understand the Beats deal, but I realize it may be because I was looking at it through a sentimentally clouded lens.

 Posted by at 2:27 pm
May 282014
 

I guess Apple bought a certain company, one which I had insisted it wouldn’t buy. I wrote 2 posts about it; I talked a lot of shit on Twitter. I was poised to take my victory lap once this week passed without an announcement.

Then it happened. I guess that does it for my career as an analyst.

Why would Apple do something for which several analysts had no explanation? The bottom line is that it doesn’t matter. This is obviously Tim Cook’s Apple. As for my poo-pooing the acquisition using the “Apple-has-the-best-designers-and-engineers-in-the-world-they-can-do-anything” logic, Cook spoke directly to that in an interview with the New York Times:

“Could Eddy’s team have built a subscription service? Of course. We could’ve built those 27 other things [Apple’s acquisitions in the last year] since ourselves, too. You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.”

So there you have it. Instead of their usual chumming of the pageview waters, the speculators finally turned in a big scoop.

 Posted by at 8:42 pm
May 132014
 

I admit that when I first saw the rumors swirling about Apple buying Beats Electronics, I was behind the news by about 8 hours. I took to my keyboard immediately and banged out some thoughts, and not all of them received the benefit of reflection. In what I’ve come to expect from the tech press, this speculation – sourced by 2 dudes at The Financial Times –  has taken on an air of completion that belies its absolutely unknown status. Since the deal has yet to be announced (although FT says it could both happen as soon as this week and that the talks could still derail – nice out, guys), I thought I’d expand on some of the points made in my post on Friday.

  • About the quality of Beats hardware – I called it shit, and I stand by it. It’s certainly not best-in-class and I’d argue it’s not in the top 20%, but then again Apple’s own kit is mediocre at best. Still, hardware is what Apple does and if Apple wanted to do better audio hardware, it certainly has the chops. Even though Beats kit sells at a decent clip, and one can assume its margins are on the high end, this “deal” certainly isn’t about their headphones.
  • About the quality of the Beats brand – I may have been a bit rash about calling it “shit”, and maybe I was associating the brand a little too synonymously with the merchandise they sell. Beats does have some cache as a brand and they have made a push to get their headphones on many entertainers – especially if they appear in front of a camera. I recently saw a UFC card where every fighter had a pair of their cans on. They’ve certainly gotten their name out there.
  • About Apple acquiring them for Beats Music – Still don’t see it – at all. Apple has the most talented designers and engineers on the planet. Apple has access to the largest collection of music on the planet. Apple has iTunes Match, which I am convinced is bashed by the same people who slag the iPhone 5C. Like I said, it isn’t Spotify, but Beats Music isn’t going to make Apple Spotify either.
  • About Apple wanting Beats Music subscribers – I think I made more of a deal out of this than the tech press did, so you know it’s a non-issue.
  • About the $3.2 billion price tag – The price is the ribbon of retardery that bundles a bunch of disperate, piss-poor reasons not to do something into a tidy package of reasons to definitely not do something. In addition to the fact that it’s likely more than what was spent on every other Apple acquisition in the company’s history combined, how do we even know what Beats Electronics is worth? The conventional method of valuation requires financial reporting data, the kind that isn’t required to be provided by an LLC, which Beats is. Sure we get some tasty sound bytes from the company like “Annual sales revenue is estimated at $1.5 billion,” but those statements mean jack shit. What were expenses? How much debt, if any, is being carried? In short, until Beats decides it wants to open its books like a grown-up company, knowing if $3.2 billion is a fair approximation of its value is impossible, which, like saying a deal is “almost closed but could still fall through” is just the kind of positioning that the rumor-mongors who sell Apple-based copy like to assume.

One thing that hasn’t changed for me is how I feel about the deal’s validity: I don’t think it’s going to happen. In a sea of tech reporters trying to disappear into their own assholes contorting a narrative that justifies the details leaked by The Financial Times, I’m still calling bullshit.

 Posted by at 10:11 am
May 092014
 

So I woke up this morning to some disturbing headlines about Apple being rumored to buy Beats Electronics for $3.2 billion. I’ve been wrong about Apple’s moves before, and the 70+ news outlets that don’t seem to mind fluffing this flaccid cock of a rumor don’t make me feel any better about saying this, but the proposition is fucking absurd.

Beats hardware is shit. I’m no audiophile dickhead, but even I can tell that when you strap one of this ludicrously-colored, overpriced shitboxes to your head, the only thing you’re doing is turning the bass up to 12. They make Handel sound like dubstep. If you’re considering buying some of their cans from the Apple Store (for whatever reason they can’t seem to get enough of them there), do yourself a favor and hire someone to kick you in the face when you listen to music instead. You’ll achieve the same effect and you deserve to be kicked in the face repeatedly for thinking about buying anything with a Beats label.

Beats as a brand is shit, although mysteriously few people have told them yet. Want to know who played up a Beats Audio presence in their kit? Companies like HTC and HP. Guess how much those pronouncements helped their hardware sales? Ever hear of the HTC Incredible and HP ENVY Rove²º Mobile All-in-One Desktop? Exactly.

The idea that Apple is acquiring Beats for their streaming audio service is shit. There’s approximately 1.5 metric shittons of streaming audio services that Apple could acquire if for some reason it wanted to be Spotify. iTunes Radio is a slightly-shittier Spotify now. How does Beats get them any closer?

The notion that Beats subscribers mean anything to Apple is shit. Apple already has close to a billion iTunes users. I’m going to go out on a limb and say they’re probably more well-heeled than Beats Audio service users. Apple doesn’t need the people rocking HTC Incredibles as customers.

And the candy coating on the creamy turd filling is that Apple would buy Beats for $3.2 billion. Google makes these kind of purchases – and people laugh at them. Facebook makes those kind of purchases – and everyone cites their value in the distant future. Apple doesn’t purchase companies for $3.2 billion – period. And buying Beats for that? Let me just say that whoever affiliated with Beats that got this bacon strip of stupidity to go viral is either a genius or was dealing with an idiot.

In a nutshell, this rumor stinks like the iPad HD rumors. It makes zero sense. I only wish there were more dissenting opinions on the matter from analysts I respect…

Will Apple buy Beats for $3.2 billion? Munster is skeptical

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 Posted by at 9:03 am
May 082014
 

Time’s Phil Harry McCracken has a timeline of ridiculousness that are the rumors surrounding Apple making a television. Highlighting the list of who’s who in asinine prognostication are several entries by dueling Piper Jaffray idiots Gene Munster and Peter Misek, who since 2010 have been the cornerstone of speculation about that thing that will never be. Fortunately for them and their families, they both presumably remain employed for reasons I assume have nothing to do with predicting trends in technology.

McCracken makes some good generalizations about the veracity of Apple rumors at the end of the piece, to which I’d add one: rumors that have no photos of alleged components have no basis in reality. Think about it: since Jizzmodo bought a stolen iPhone 4 prototype in April of 2010, there has been a shit-ton of leaks that have ramped up to the introduction of every iPhone since. Individually none of them were 100% correct, but taken as a composite, they formed a pretty good preview of what the next Apple device was going to look like. For the Apple television? Nothing. Not one decent-looking mock-up or a single blurry component photo. If the laundry list of reasons that Apple shouldn’t release a television weren’t long enough for anyone not looking to making a buck off of making shit up, there wasn’t a single shred of evidence to corroborate this wet dream.

You want to know what the next Apple television product will look like? Take a look at Amazon’s Fire TV: it’ll be a souped-up version of the device Apple already produces, complete with a slick new remote. Because content always has and always will be the cornerstone of the experience, that’s all it needs to be. Check back here in 6 months and watch me brag about how right I was – or watch me stop writing altogether. At this point, they’re both equally likely.

 Posted by at 3:08 pm
May 062014
 

Excellent article in Vanity Fair recounting the history of the Apple-Samsung patent dispute. Here’s Samsung’s take on intellectual property from the mouth of a lawyer who used to represent them:

“They never met a patent they didn’t think they might like to use, no matter who it belongs to,” says Sam Baxter, a patent lawyer who once handled a case for Samsung. “I represented [the Swedish telecommunications company] Ericsson, and they couldn’t lie if their lives depended on it, and I represented Samsung and they couldn’t tell the truth if their lives depended on it.”

 Posted by at 12:56 pm
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