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.