Apple is reported to be in negotiations to purchase Beats Electronics, a maker of high-end headphones and a streaming music service. It's a potential buyout in the billions and it all makes me wonder if Apple is reverting to its old ways when it comes to peripherals. And that may not be such a bad thing.
There's been a lot of speculation about why Apple would pay a few billion for a maker of high-end headphones. It's difficult for some to see the return on the investment. However, I can see one. But first a history lesson.
Many reorganizations ago, Apple developed and manufactured a long list of digital peripherals selling digital cameras, scanners, printers, input devices, and storage. It was a big business for the company, from several divisions. And many of these peripherals weren't commodity, me-too products. There was plenty of R&D and investment in the products and the technology.
For example, I once owned a Apple QuickTake, one of the first digital cameras for consumers, the first of which shipped in 1994. Mine had a maximum resolution of 640 by 480 pixels and could hold up to 16 high-quality (count 'em) images. It connected to my Mac with a serial connection. It's difficult to imagine nowadays when the iPhone sports an 8-Mpixel resolution.
However, When Steve Jobs returned to Apple in 1997, he determined that these divisions, while profitable, were a distraction to the primary business of the company, the making of Macintosh computers and its software.
I wrote a story about this in the August 4, 1997 issue of MacWEEK, which followed the summer Macworld Expo in Boston.
Apple's Imaging division reportedly will play a dimished role in the company by the end of the year. Sources said Apple will pull the plug on further developments of most products, including its low-cost StyleWriter inkjet printer line, digital cameras, and scanners.
The change was a strategic decision made after a review last week by Apple advices Steve Jobs, according to sources. Apple will "stop shipping boxes other people can do," one source said.
According to sources, one project that may be kept is a high-performance FireWire-based printer that can use the Display Postscript technology built into the forthcoming Rhapsody OS.
As you might recall, it took years for Apple to refine Rhapsody into the shipping Mac OS X and the FireWire printer described never shipped. It was essentially a more advanced version of the printer that shipped with the NeXT box.
Jobs' point was on the mark. He didn't want to pour money into products that were becoming increasingly commoditized, particularly printers, scanners and digital cameras. However, Apple still sells peripherals that support its in-house and adopted technologies, and enable the company's integrated-solution approach. For example, this would include its Thunderbolt monitors and its gesture-savvy Mac input devices.
There's plenty of speculation about what Apple wants with Beats. I will add to that speculation: Apple may be eyeing the currently nascent, but developing market for high-resolution audio (HRA). The performance demands of this high-bit-rate, high-sampling-rate music is considerable. Neil Young recently announced the Pono system, comprising the PonoPlayer and PonoMusic Store. It targets this HRA segment.
However, there are other paths to HRA than Pono or Sony. For example, I recently purchased Light Harmonic Labs GEEK, a small hardware amplifier and DAC (digital-to-analog converter) that connects to a computer through USB and permits the playing of HRA files in full fidelity and 3D Sound. There are plug-ins that support the playing of these files in iTunes. Still, that's not the integrated approach that Apple puts out.
Apple could provide an integrated hardware, software, and service solution for this high-resolution content. Apple has the engineering know-how for the hardware and software sides, as well as its own base of iTunes customers who might be interested in stepping up for these solutions. The Beats customer base will certainly be interested in this content and give the Apple solutions (Apple/Beats, that is) an readymade evangelizing and knowledgable segment.