Apple made it official Wednesday that it would acquire Beats Entertainment, but even after weeks of speculation, pundits still can't decide whether the deal is a smart move.
Apple made it official Wednesday that it would acquire Beats Entertainment, but even after weeks of speculation, pundits still refused to reach consensus about whether the deal is smart or not, about what Apple gets, and about what it will do with the new assets.
On top of that, many analysts and long-time Apple observers have continued to use the words "perplexed" and "puzzled," typically anathema to the opinions-on-everything politburo.
"The Beats deal is a little bit of a 'head scratcher' for us," admitted Brian Marshall, an analyst with ISI, in a note to clients after the acquisition was announced.
In itself, that's unusual.
Analysts may read technology's entrails like cuneiform tablet-carrying Sumerian soothsayers -- a tougher task with Apple because the company is more impenetrable than most -- and see different variations of the future. But they usually settle on a thumbs-up or thumbs-down, even if that means two camps. Good. Or not. Likely. Unlikely. Well-spent money. Cash flushed away.
This time there are not just two camps, but scores.
Benedict Evans of the venture capital firm Andreessen Horowitz came up with a memorable description of what was happening. "The Beats deal is a Rorschach Blot: people's reactions slot into their existing view of whether Apple still has 'it.'" Evans said on his blog Wednesday. "If you think Apple's lost it, the Beats deal is confirmation. If you don't, it's ... perplexing."
Analysts continued to try to digest the deal, which has Apple paying $3 billion for Beats Electronics and Beats Music, most of that in cash, a small portion in stock that will vest over time. The acquisition is expected to close later this year.
Beats' co-founders, record executive and producer Jimmy Iovine and rapper Dr. Dre, will become Apple employees reporting to Eddy Cue, who runs the company's Internet software and services division, including iTunes and the App Store.
Interpretations of the deal, its impact and Apple's intelligence remained legion.
"It's the acquisition of the brand more than anything else," said Van Baker of Gartner, in an interview. "They think with Beats they can reach out to a younger, more urban, more hip-hop demographic."
Baker's take leaned toward the "cool" rationale for the deal, that Apple, stumped since Steve Jobs' death, needed an infusion of talent able to define consumer and cultural trends, spot the right moment, make the right move -- someone to reinvigorate the brand, even though Beats will remain a brand separate from Apple's. Many have pegged Iovine as the answer, not as a replacement for Jobs, certainly, but as a tacit Apple admission that its current leadership wasn't up to the challenge.
And that's bothered some, seeing in their forecasts an Apple different than the one they've become used to.
Others have stressed one or the other of the pieces Apple's buying as the main reason for the acquisition, citing evidence, for example, of declining music downloads as proof that Cupertino had to get into streaming. Because it is best to be fast, Apple had to pay an outlandish sum for a service with only a quarter-million paying subscribers, just 2.5% of Spotfiy's 10 million.
"For those consumers that use a streaming subscription app, the playlists and music collection can exist on any device," observed Mark Mulligan, a former analyst with Jupiter Research and Forrester, now co-founder of MIDIA Consulting, which specializes in advising firms on media and content issues. "Suddenly, the handcuffs slip off. This is why Apple has to get streaming right in short order. It simply cannot afford to lose swathes of its most valuable device customers at the next handset replacement cycle," Mulligan wrote on his blog Thursday.
Or they touted the cash flow of Beats Electronics, and Apple's stagnating sales in accessories, which could use a shot in the arm that the pricey headphones would provide. If the revenue boost those sales generate get itchy, fickle investors off Apple's back, so much the better.
Others have looked at the deal and seen nothing but negatives, picking each component apart. Beats by Dre headphones are technically crap, they say, even though Beats' account for the majority of the premium-priced over-the-ear market. Beats Music is nothing, they argue, that Apple couldn't have built in its sleep. And Iovine and Dre, well, they'll never fit into the Apple corporate "culture." Dre's woozy, self-congratulatory video that hit YouTube when the story broke earlier in May was all the proof those pundits needed, they said.
The interpretation of the Apple-Beats deal has been incredibly messy, with almost as many interpretations as interpreters.
Not that that's a bad thing. It will likely spawn a much longer media cycle than Apple's usual stories, a boon to Cupertino. With so many available angles, reporters and bloggers have more fodder than the usual -- like the introduction of a new iPhone or iPad or Mac -- and so it will take longer to exhaust the supply.
But it has been confusing. With so many fishing for answers, the water's become incredibly muddy. Why so little agreement on this move?
"I think, ultimately, the issue was that people thought it had to be about just one thing," said Jan Dawson, chief analyst at Jackdaw, when asked why the analysis of the acquisition remains so tangled. "Some have been insistent that it's about this and not about that, and trying to explain it with one reason. The reality is, that's not the case. It's not about one thing. It's about all three things."
Those three things, as Dawson and others have categorized them, are headphones (Beats Electronics), streaming music (Beats Music), and new talent and an invigorating brand (Iovine and Dre, Beats' demographics).
In Apple's eyes, the whole of Beats was greater than the sum of its parts. Because all three pieces of Beats fit Apple, not just one or even two, it was, said Dawson, "a good strategic match."
Following the analysis of this deal has been more fun than Apple's provided in a long time. Not because no one's getting it right or everyone's irrational -- ultimately, only Apple knows why it bought Beats and it may not yet know how it will earn back the billions -- but because it's anarchic, muddled and argumentative.
Like a good mystery. But this one has not a room full of suspects, but one crammed with detectives, all squabbling about the motive and bickering about the likeliest culprit.
"The next few years will be interesting to watch to see the fruit that comes from this deal," Ben Bajarin of Creative Strategies wrote Wednesday on Techpinions.
No one needs to wait that long. It's interesting to watch now.
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is email@example.com.
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This story, "Beats me: Everyone posits a theory on Apple's $3B deal" was originally published by Computerworld.