The news that Apple may be about to drop $3.2 billion to buy high-priced headphone maker and newbie music streamer Beats By Dr. Dre has roiled the Internet. Many observers seem confused why Apple would possibly do such a thing, while a few others are trying valiantly to defend the possible purchase.
As usual, the truth lies somewhere in between. While it's clear that Apple needs to improve its headphone line and jumpstart its own iTunes Radio streaming service, Beats is so not the right way to do either of those things. And while buying Beats doesn't actually solve Apple's problems, there are potential acquisition targets that would.
Stay classy, Apple
First, here's why Beats is a bad fit for Apple. Beats built its business on marketing spendy, flashy, bass-heavy headphones to trend-conscious young people. It has supplemented that business with some audio accessories and speakers and a nascent music-streaming service - plus licensing its BeatsAudio "technology" to help laptop makers like HP, phone makers like HTC, and even carmakers like Fiat beef up their audio output.
Basically, Beats is a fashion brand, charging premium prices for nothing-special performance and a complete lack of subtlety. Its deals with other technology companies haven't gone particularly well. HTC bailed on its investment in Beats, and has anyone ever bought an HP laptop because it has BeatsAudio?
Apple's justifies its premium prices with a classy, understated design aesthetic as well as performance (yes, I know some people will argue with this characterization, but check out the Mac Pro). Adding Beats products might add some sales volume, and could attract a younger demographic, but risks diluting Apple's own brand. Pairing Beats' enormous over-the-ear cans with a sleek iPhone is a design disconnect. Heck, the headphones are way bigger than the phone!
Better hardware partners
If Apple really wants to move into the audio/accessories arena, there is a far better option: Jawbone. Though a much smaller company, Jawbone's products - including the eponymous Bluetooth headsets, JamBox speakers, and UP fitness trackers -- are much more attractively designed and feature far more cutting-edge technology. They fit effortlessly into Apple's brand messaging, and Jawbone's technology could help Apple in many ways. Jawbone would probably cost a lot less than Beats, too, though that may not matter much given Apple's stock price and cash hoard.
Sure, Jawbone wouldn't deliver the same immediate sales bump on the headphones side that Beats would, but Apple has the heft to become a force in headphones on its own - all it would have to do is try. And if Apple really wants to gain headset cred, why not buy an outfit like Sennheiser or another company with some serious audio chops?
What about music streaming?
Some commentators suggest that Apple's main motivation in pursuing Beats is the new streaming music service called BeatsMusic. Streaming music is indeed threatening Apple's dominance in downloaded music, which is why it recently launched iTunes Radio. But if Apple is serious about streaming music, why spend billions to acquire another newcomer attached to a far-larger headphone business instead of directly snapping up one of the streaming music market leaders like Spotify, Rdio, Rhapsody, or Pandora? Such a purchase might be more even more expensive than Beats, but again, Apple has plenty of scratch to make deals it really cares about.
Frankly, it's hard to see what buying Beats really gets Apple that couldn't be done more effectively in other ways. To keep Beats from sullying the Apple brand, it might need to remain a separate entity, but then what's the real value? Apple's best hope for the future is doubling down on its position as a design and experience product leader, not chasing fickle fashion, no matter how successfully marketed. Apple still makes plenty of money. It doesn't need to buy headphone sales, it needs to acquire innovation and quality - and maybe streaming music subscribers. Beats doesn't deliver on any of those scores.
So despite the reports, I'm hoping that this deal turns out to be nothing more than another incorrect Apple rumor. If it turns out to be true, it certainly won't wound Apple in a big way, but it's hard to see how it helps much, either.