Apple is reportedly shelling out $3.2 billion to buy Beats Audio, a surprising move for the folks in Cupertino. Word of the possible merger has generated knee-jerk reactions both pro and con from those watching Apple. As surprising as this move is, the two companies have a lot in common that makes them a great fit.
The similarities can be summed up in three words: eclectic, artistic, and iconic. These are traits that Apple has exhibited for years, and Beats Audio since its founding.
Apple began to set itself apart from other companies when the iPod was introduced. It took a product segment that others started and created a design that appealed to the masses. It coupled that with an original marketing campaign, the dancing silhouette ads, that appealed to millions world-wide.
This was repeated with the iPhone, the iPad, and the MacBook. Apple is a master at taking ideas from existing product categories and making them unique in a way that is appealing to the masses. Some people will tell you that Apple products are over-priced fashion statements and that’s why they are so popular. There may be some truth to that, but the products are also very good.
Beats Audio has taken the same path with its headphones. It entered a highly competitive segment and set out from the beginning to go after the high-end market. The Beats Audio headphones cost hundreds of dollars, and they appeal to young, trendy consumers. Sales have done well, if seeing them everywhere on the street is any indication.
Both Apple and Beats Audio have taken the same eclectic route with their products. They’ve both successfully tapped premium product markets, and gotten high margins as a result.
From the clean lines of its products to the artful ad campaigns used to sell them, both companies have shown an artistic side that appeals to the buyers of high-end products. They appeal directly to the creative consumer wanting a product that is attractive while giving an enjoyable user experience.
Apple was able to show its artistic side under Steve Jobs, but is having trouble continuing to do so under Tim Cook. The company realizes that and has embarked on a course of showing the artistic side of Jony Ive. That’s not working, given how impersonal he comes off on screen.
Beats Audio has a very artistic image due to its founders, Jimmy Iovine and Dr. Dre. The former is a big player in the music world, and the latter one of the biggest hip-hop singers in the world. They know the music business inside and out, and fans believe them when they pitch their headphones.
As odd as it seems, I believe both of these founders of Beats Audio will bring a fresh dose of showmanship to Apple with the merger. It’s rumored that Apple will bring Iovine and Dr. Dre to the stage at WWDC in a few weeks to get this kicked off. Apple will get a dose of an artistic touch infused into its public image as a result.
If you had to describe Apple’s and Beats Audio’s products with one word, iconic would do nicely. From the first iPod to the latest MacBook Air, Apple has brought products to market that are instantly recognizable. The same can be said about the Beats Audio headphone line. You can spot them a block away and know which brand they are.
This can be doubly effective with the product lines merged. An iconic audio solution coupled with Apple’s entire product line would be killer. The marketing campaigns will almost write themselves.
Speaking of marketing campaigns, I can easily envision the rebirth of the famous Apple dancing silhouette ads, with Beats headphones replacing those iconic earbud wires. These ads were highly successful in pushing Apple’s products, and they would rekindle that excitement all over again. Beats plus Apple equals an unparalleled joyful experience, would be the message.
Two are better than one
The synergy described in this article is powerful, and will make the merged operations better than the two parts. There’s also a strong business case for the merger that takes it even further.
Apple’s iTunes Radio and iTunes Match haven’t set the world on fire, so adding Beats Music streaming service can only bolster that effort. The Beats service has gained a decent amount of ground in such a short period, and that can only accelerate when integrated into Apple’s existing music offerings. This is especially true when you consider the hundreds of millions of credit cards Apple has on file. One-click subscription will be huge.
The Beats Audio headphone line will fit perfectly with Apple’s existing device lines. There’s a lot of cash to be made by Apple with the headphones in the store. A recent study by the NPD Group pegs the premium headphone market at a billion dollars, and that’s even big enough for Apple.