Apple returning to peripherals business?

Apple returning to peripherals business?

Summary: Apple once had a prosperous peripherals business, but Steve Jobs decided it was a distraction to the core mission of the company. Now, with the buyout of Beats Electronics, maker of headphones and streaming music services, there is speculation that Apple may return to its old ways.

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TOPICS: Apple, Hardware, iOS
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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.

Apple returning to peripherals business?

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.

Check Out: History lesson: Apple vs. Microsoft reorganizations

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.

Topics: Apple, Hardware, iOS

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22 comments
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  • Seriously?

    "There's been a lot of speculation about why Apple would pay a few billion for a maker of high-end headphones"

    It' because there are still a lot of fools that believe that High Priced = High End.

    Line up rubes, Apple has some new junk for sale!
    Mujibahr
    • the hipsters

      They are about all Apple will get buying the Beats headphones as anyone with half a clue stays away from them.

      More likely they are after the streaming music side - having been burnt trying to do things themselves with Maps they have more likely realised its safer to buy a working product then try and build it (and inevitably screw it up)
      aesonaus
      • Doesn't Beats already own over 60 percent of the market?

        Beats has managed to dominate the market without Apples marketing help. Now add Apple in the mix and it's easy to see them bringing it to another level of domination. So it's not "just" the hipsters purchasing these headphones, it's the majority of "high-end" headphone consumers.

        Let's hope Apples engeneers help in improving the sound quality, because I agree it's not that great.
        dave95.
        • iBeat

          I my opion it is not about market share or sound quality or anything else. It is about the name. If you wanted to build a head phone with an iPod built in what would you call it, iHead. It just does not sound right and is really open for a lot jokes. iBeat, now that sounds right. It may sill be open to some jokes but not as bad as iHead. For iBeat, it is just a bonus that it is tied to a popular brand to begin with.
          MichaelInMA
          • Agreed.

            Monster Cable did all the technical design and development for the Beats headphones. Unfortunately they (the son) were very bad at negotiations and failed to secure the design/licensing rights.

            Apple recognizes the fact that so many kids are walking around with 150-300 headphones. This is like the craze with Air Jordan shoes years ago.

            There are plenty of other quality headphones in the market, but Dre was a master at marketing and used product placement with athletes and musicians to create the fashion craze.

            Beats do sound good, but there is no way I'd spend that amount of money on headphones and I could easily purchase them. Its simply amazing to see kids with no jobs, walking around with these on their heads. Some pretty dumb parents/grandparents IMO.

            To each his own.
            GotThumbs
        • Do they really?

          Then I must count myself ashamed that this is the first I've heard of them. For "high-end" headphones I tend to think of the likes of Sennheiser or Koss, though my Sennheisers definitely aren't high end. You can't buy high end for $179.
          Laraine Anne Barker
    • I keep hearing

      that Beats are high quality in the press, then I read detailed reviews and they generally pan the headphones as having too much bass and naff all elsewhere in the range and therefore the reproduction quality is poor...
      wright_is
      • They were built with Hip Hop in mind where

        Bass is king and accurate reproduction is second.

        Still decent sounding, but just not worth the price IMO.

        But I think the same thing about Apple computers, so maybe this deal makes perfect sense.

        To each his own.
        GotThumbs
      • Hip Hop

        Dr. Dre is the stage name of Andre Romelle Young, Hip Hop producer and rapper. Doesn't take much imagination where Andre got Dre from, but "Dr," give me a break. You surely can't be expecting much. To the Press, that's just it, high price + lots of bass = hi quality. The rest of the range you call naff is right. To the audiophiles, Beats by Dr. Dre is a joke. This is purely 100% about Market Share, nothing to do with quality.
        ManoaHI
    • What do you care

      They are spending their own money, and not yours. Methinks you protest a bit too much.
      baggins_z
    • yup

      There is also a lot of sour grapes that says that anything I can't afford, is junk.
      Henry 3 Dogg
      • HA HA HA HA

        You're funny! Fad != Quality and Cost != Quality
        happyharry_z
  • Beats = Black & Decker!

    Beats do not sell any high-end headphones, so buying the Beats brand to target Audiophiles makes no sense - that would be like buying Black and Decker to target workmen or Chivas Regal to target whiskey connoisseurs. The most popular high quality headphones at the moment are probably the Sennheiser Momentums, with the B&W P5/P7 holding their own for design conscious consumer that want good quality sound.
    High end picks are Sennheiser HD800, AKG 812 and the Audeze models.

    I would think that buying B&W or Audeze would have been a much more relevant move if Audio enthusiasts are the target - B&W because of their Apple-compatible design aesthetics and Audeze because it's a small and probably relatively inexpensive acquisition with a brand that could be leveraged for a high quality but slightly less exclusive headphone line.

    The Pono-player is also a strange beast - there are several readily available players, for example Astell & Kern AK100, AK120, AK240, FiiO X3, Fiio X5 etc that already offer better audio quality and more features than the Pono-player aims to provide when it launches. I don't really see the point, except of course the celebrity connection.
    Tobias Carlén
    • Ask the person on the street

      have they ever heard of Sennheiser and then ask them about Beats. Which one will garner the most popularity? This is not about a high end market. That is far too small for Apple. Beats for headphones is like a pair of Jordans for tennis shoes. Its more about the brand name. I am still at a loss as far as what Apple is trying to accomplish here.
      thekman58
      • Market Share

        Audiophiles do not care about Beats. Their reaction is the same for Dr. Dre that Dr. Bose received. Beats is not audiophile quality, and neither was/is Bose. Person on the street won't know Sennheiser, nor Stax (their electrostatic), nor HiFiMAN (planar magnetic, like Magnepan).

        What is Apple thinking? Market share. The audiophile brands are not likely to sell themselves to Apple. Some of the above cost more than a Mac.
        ManoaHI
    • really?

      Beats have substantially over half the market for headphones costing more than $100.

      And that is less than 5% of all headphones produced.
      Henry 3 Dogg
      • And?

        Tobias was talking about audio quality, not market share.

        That said, here in Germany, I see Sennheiser everywhere, apart from in Vodafone shops attached to htc phones, I haven't seen Beats anywhere for sale.
        wright_is
        • Does that really lessen there popularity?

          Your having not seen them?
          And yes I understand the comparison related to audio quality, but he mention buying beats to target "Audiophiles ". That is definitely referring to "market share", and a very small part of it at that.
          thekman58
  • More like lifestyle brand.

    I think they are strengthening their lifestyle brand play, which started with the iPod/iPhone and iPad. Where it's not just a piece of hardware you buy but rather a way of life. Fashion statement, design, wearable computing focussing on health (think fitbit)- it's all lifestyle branding. Beats headphone has transition from just another headphone to the headphone you MUST have in certain settings. Or must have because everyone else is wearing it. Marketing played a huge role here in the success of Beats, to the point where it begins to sell itself after awhile. If Apple can help improve the quality to match the lifestyle brand (like their other iDevices), then it will continue to be an unbeatable combination.
    dave95.
  • This article is really dumb

    Since Apple already produce their own headphones, and already have their own music streaming services, I can see no logic in the premise of the article that ...

    "...with the buyout of Beats Electronics, maker of headphones and streaming music services, there is speculation that Apple may return to its old ways"

    It just doesn't make any sense.
    Henry 3 Dogg