back to article $3.2bn Apple deal would make hip-hop mogul Dr Dre a BEEELLLIONAIRE

Insiders claim that Apple is close to acquiring Beats Electronics, the headphones-and-streaming-music company founded by music mogul Jimmy Iovine and rapper Dr Dre, in what would be the largest purchase in Apple's history. Separate reports by Bloomberg and the Financial Times both value the proposed deal at $3.2bn. Previously, …

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Isn't Beats Audio just a funky way of saying...

..."I don't know how to use a graphic equaliser"?

Match made in heaven, I suppose.

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Re: Isn't Beats Audio just a funky way of saying...

Up at either end, flat in the middle, and everything in between interpolated - if my 80's memory serves.

Also achieved by the "bass boost" option button for a cleaner interface (late 80's/90's).

"No option" is the latest version of a simple interface. It appears they have achieved Apple's requisite level of user interface design.

Actually, HP's original touchpad has excellent sound - knocks the spots of most laptops. I don't know if that was Dre-influenced. Personally, I've always thought that marketing HP and rap-influence together was an uneasy situation. Surely if HTC, HP and Apple all have it, it can't still be cool and fighting against the Man.

Oi Apple, an iscsi initiator would be far more useful. Anyone who is serious about sound is going to run things through an external amp and can mess with it there. By "serious" I mean, "at least vaguely interested in turning the volume up a bit."

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Re: Isn't Beats Audio just a funky way of saying...

"Surely if HTC, HP and Apple all have it, it can't still be cool and fighting against the Man."

To quote the first proper number 1 in the UK of the Millenium by the Manic Street Preachers, "Masses Against The Classes" - "A slave begins by demanding justice and ends by wanting to wear a crown".

Same can be said for most people who start off kicking against the man but are then happy to lay down in bed with him once they have a tonne of money.

I find the Beats Audio headphones a waste of time, and especially money. Far too much bass ruins the music I listen to but then again it could be good for other genres. For me, you can't beat a pair of £50 Sennheiser headphones.

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Re: Isn't Beats Audio just a funky way of saying...

>Actually, HP's original touchpad has excellent sound - knocks the spots of most laptops. I don't know if that was Dre-influenced.

It's simpler than that - there is no point in adding a few dollars to the cost (not to mention weight and bulk that could be used for a bigger battery or better cooling or whatever) of making a laptop sound better than average if you then have no way of advertising that to consumers. Audio quality is hard to express in numbers (like you would CPU speed, RAM size etc) so a degree of 'badge engineering' is the way to go.

Apple have done it with Harmon Kardon in the past, others have done it with Bang and Olufsen.

Obviously businessman Dre wouldn't want his company's name on a laptop that sounded rubbish, so the people he employs to protect his business interests are only going to sign off on it if the machine sounds better than average. How this is achieved doesn't really matter.

Okay, so B&O do have experience of making some good compact Class D amplifiers, but a better than average audio system could also have been sourced from some other manufacturers who don't have the same brand presence. Having a B&O sticker on the laptop helps gets the message across on the sales floor.

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Re: Isn't Beats Audio just a funky way of saying...

>Far too much bass ruins the music I listen to but then again it could be good for other genres. For me, you can't beat a pair of £50 Sennheiser headphones.

Interestingly, Phillips have taken advantage of there being too many 'Mega! Extreme! Bass!' headphones on the market, by actively promoting some of their wares as having a "natural sound". In addition, they have further sought to differentiate themselves by calling their line 'Indy', suggesting a musical genre removed from bass-heavy genres like dance and hip hop music, and by incorporating design cues such as denim into the headbands.

Still yeah, if in doubt buy some Sennheisers at whatever price point you can afford.

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Headmaster

Re: Isn't Beats Audio just a funky way of saying...

Or you could quote Albert Camus, which is who the Manics were quoting in that song.

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Re: Isn't Beats Audio just a funky way of saying...

Actually it's just a funky way of saying "I paid too much for my headphones".

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Re: Isn't Beats Audio just a funky way of saying...

>Oi Apple, an iscsi initiator would be far more useful.

Ug?

Forgive my ignorance, but can't you already use external DACs with iDevices, just as you can with more recent Android devices? I've even heard of people using iPads with external DACs to play back native 192Khz 24bit FLAC files. Why's an eyescuzzy thingy needed?

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Anonymous Coward

Re: Isn't Beats Audio just a funky way of saying...

It's a combination of EQ and having a decent amount of power available to drive headphones. But it is largely bollocks. Monster audio used to be involved.

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Anonymous Coward

Re: Isn't Beats Audio just a funky way of saying...

You can do small and powerful, I'm really impressed with the Sonos Play 1 considering its size. While anything like that won't match a proper hifi, it is great for the kitchen.

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Re: Isn't Beats Audio just a funky way of saying...

"I paid too much for my headphones".

Agreed, but it also says that "I have no real interest in the actual fidelity of music".

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Re: Isn't Beats Audio just a funky way of saying...

P.Lee» an iscsi initiator would be far more useful.

It is ironic that Apple shouldn't have an iSCSI initiator.

Apple were one of the big proponents and every mac had it until SJ returned in 1997. Apple have also become known for their consumer products being iThings. That they don't have iSCSI is a shame.

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Re: Isn't Beats Audio just a funky way of saying...

@joeW

You are indeed correct, I didn't know it was a quote from Camus. I knew the first quote in the song was Noam Chomsky. Thank you for clarifying it, and as a thank you have a +1 as it's Friday :)

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Pint

Beats headphones/earphones, and the 2nd Shift Theory

If you attend the largest electronics night market in Hong Kong, you'll quickly realize that the gadgets on offer are disappointingly boring because approximately half of the vendors' inventory are just Beats brand headphones. Extremely tedious. They're on offer for about 25% of North Amnerican inflated retail. I didn't bother to explore the ultimate selling price by actually buying one - because I wouldn't want people to see me with Beats headphone and justifiably conclude I was a moron.

Wearing Beats brand = not likely to be attending many Mensa meetings.

Usually this volume of grey market product is a strong clue that a renegade contracted factory is perhaps running a 2nd shift to crank out unauthorised, but otherwise genuine, product.

Something Apple would likely put a stop to.

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Pint

Re: Isn't Beats Audio just a funky way of saying...

"...use external DACs with iDevices..."

"Not good enough. The iDevice has way too much jitter." (channeling the audiophiles)

Eventually the iDevice is reduced to flash storage (of the uncompressed file), and the GUI, nothing more. That's assuming that the idiotphiles don't accuse the flash storage of being multilevel and thus somehow ruining the bits.

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Re: Isn't Beats Audio just a funky way of saying...

Actually it's just a funky way of saying "I paid too much for my headphones".

Or, in other words, as a certain comedian once said;

"I got LOADSAMONEY!!!" (or possibly "I HAD loadsamoney")

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Re: Isn't Beats Audio just a funky way of saying...

An iSCSI thingy is needed so you can store your massive collection of 192KHz 24 FLAC files on a network attached storage device and access them on your computer.

I have a Proliant Microserver running FreeNAS with 10TB of addressable space (5 x 3TB drives). On Windows, the transfer speed is about double if I use iSCSI to access it rather than Samba. On my MacBook, the only options are Samba and Netatalk and performance is around the same as using Samba on Windows.

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Re: Isn't Beats Audio just a funky way of saying...

That's assuming that the idiotphiles don't accuse the flash storage of being multilevel and thus somehow ruining the bits.

It certainly doesn't have that rich, natural sound that you get from core memory. You can't beat magnets strung on wires.

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Boffin

@ Michael Wojcik

Oi, I cut my teeth on an ICL 2904 with 64kB of core store the size of a fridge, and 10MB Winchester packs the size of a small planet, and it sounded like lots of fans running in the background...

Hummmmmm......

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Trollface

Overpriced, over-rated and over-valued...

They sound like a perfect match!

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Re: Overpriced, over-rated and over-valued...

Eerily, overpriced, over-rated and over-valued also describes a lot of opinions.

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Re: Overpriced, over-rated and over-valued...

>over-rated and over-valued also describes a lot of opinions.

Situation normal, then!

But yeah. The Bloomberg report - and the rest of the internet - places far more emphasis on the music streaming side of Beats' business. To comment on the headphones (which aren't great but are very profitable) is to miss the point. It's not hard to grok (if you read before you comment):

People are buying less music each year and are streaming it instead. Apple's attempts to launch streaming services haven't been as successful. Spotify and Beats et al are eating Apple's iTunes lunch. Apple need in.

Whether or not this foot in the door is worth 3 beeellion dollars, I have no idea, but some 'badge engineering' certainly isn't.

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Happy

Re: Overpriced, over-rated and over-valued...

"(which aren't great but are very profitable)"

Sounds like most fashionable purchases.

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Re: Overpriced, over-rated and over-valued...

Apple has vendor relations problem, not a lack of headphones or semi-retired gangsta rappers problem. Apple want Beats because of their contracts with the record labels, which have considerably better terms than what they've been able to negotiate.

Once they've bought those terms they're in a good spot for future negotiations with the labels. The labels are still angry at Apple for boxing them in on iTunes pricing, they feel like they left money on the table before. Beats gives Apple a toehold and the labels will have to negotiate on Apple's terms or take the revenue hit.

Facts are cool. A person can't say 'over priced/valued/etcetera' unless they've got facts. If they had facts they would have no sane reason to comment on price, because the price is a bargain.

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Stop

Re: Overpriced, over-rated and over-valued...

Don't worry Don, my opinions will always be free at the point of use.

The other two, I leave to your discretion.

;o)

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jai
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Re: Overpriced, over-rated and over-valued...

The Bloomberg report - and the rest of the internet - places far more emphasis on the music streaming side of Beats' business

To be fair, so too did the original report on April Fools day:

http://lefsetz.com/wordpress/index.php/archives/2014/04/01/apple-buys-beats/

Have any of the other sites to report on this confirmed that they've done further research to see if there is anything more to this story than an April Fools joke?

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Childcatcher

Perfect match

It makes sense that con-artists like Apple would buy into a scam like Beats Audio.

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Re: Perfect match

Now they just need to buy Monster cable.

I expect they could save a lot by combining the legal teams.

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Anonymous Coward

Re: Perfect match

Reading those specs in your link it doesn't sound like a scam. The EQ part may be, but the other parts are merely defining a minimum specification for audio which is much higher than other devices.

So what they're doing to ensuring that audio gets special treatment by the PCB designer, who normally wouldn't really care or know much about audio design (it's a phone, not a HifI).

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Joke

Re: Perfect match

Apple don't need Monster Cable... They're already selling Thunderbolt cables for £35.00 a pop without the bad publicity ;)

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'Beats Audio' the perfect match for 'Retina displays'.

In so many ways...

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Just as dumb as Google buying Nest for the same $3.2 billion

How could this possibly be worth it for Apple? It is always cheaper to license technology or hire the people who developed it than to massively overspend for an acquisition.

As a shareholder, I certainly hope this rumor turns out to be just that.

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Re: Just as dumb as Google buying Nest for the same $3.2 billion

>It is always cheaper to license technology or hire the people who developed it

Umm, I'm not sure that Beats headphones have any exclusive technology - they are mediocre headphones sold at a large mark-up, which is why Beats command a large fraction of the profits in the headphone sector. Nor is the style and image of Beats hardware a natural fit for Apple... and in any case, this image can't be relied upon to be in vogue indefinitely, oh capricious fashion!

Apple wouldn't be doing it for the headphones, but for the music streaming service Beats already has in place. As an Apple shareholder, you'll be aware that music streaming is eating into iTunes music sales.

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Re: Just as dumb as Google buying Nest for the same $3.2 billion

They aren't buying the technology, that gets tossed in for free. They're buying the streaming contracts as leverage for future negotiations with record labels.

I'm curious as to why you think licensing or hiring people is always less expensive. That is incredibly incorrect, I just want to know how you arrived at that conclusion.

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Re: Just as dumb as Google buying Nest for the same $3.2 billion

I should have said "always less expensive than paying a crazy price for a company". If you don't wildly overpay then I agree, licensing/hiring can easily get more expensive.

Does Beats really have better streaming contracts than Pandora, iHeartRadio et al? Surely they could buy one of the many streaming players for much less than $3.2 billion.

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For what?

Unless I've seen wrong, Beats has no intellectual property or inventions. They're a copyright logo and style of sound. What exactly is Apple buying?

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Re: For what?

A music streaming service, because streaming is up and digital music sales are down.

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JDX
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In 2011, HTC invested $309m for a 50 per cent stake in the company

So in 3 years the company value has quintupled from 0.6bn to 3.2bn?

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Anonymous Coward

Re: In 2011, HTC invested $309m for a 50 per cent stake in the company

> So in 3 years the company value has quintupled from 0.6bn to 3.2bn?

Yes. When the invisible hand guides the free market, quintupling happens.

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Re: In 2011, HTC invested $309m for a 50 per cent stake in the company

Unless there is a dead hand persistently pushing the "print" button at the federal reserve.

Which is the case.

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Anonymous Coward

That's what you do

when you don't really have a product development strategy - and Apple does not appear to have one. Churning out the same iPhone or iPad year after year and changing the model number along with the color or texture of the back plastic or the placement of the on/off button isn't really a product development strategy.

So, you make a completely nonsensical and very expensive purchase, and you get the industry analysts and fanbois busy with vapor talk for the next six months.

Oh, almost forgot: Apple, if you go ahead with this purchase, please don't forget to get a patent for "Mechanism and Apparatus for listening to Music through a Pair of Headphones connected to a Music Player". That should be worth at least 12 Samsung lawsuits.

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Re: That's what you do

>That's what you do when you don't really have a product development strategy - and Apple does not appear to have one.

I'd have thought that keeping your powder dry and waiting for the correct time to release a product in a new category is a better strategy than just releasing a product for the sake of it.

iPods required Hitachi to make 1.8" HDDs first, in order to achieve a 'cigarette packet' size. iPhones required a threshold level of CPU/GPU and battery performance. iPads sold more units than Windows XP Tablet Edition machines, in part because they were lighter and the consumers were already familiar with multi-touch UIs on phones. None of these Apple devices were the first devices of their kind, but each was successful, profit wise.

It isn't always a bad strategy to let other companies make the first attempts to create a new category, and to learn lessons from their failures and successes.

However, in this case Spotify and others have benefited from being ahead of Apple on the music streaming front. Apple did well to negotiate with music publishers at the birth of their iTunes store (tempted publishers in with DRM, which Apple then dropped when they had enough industry clout), but now it looks like they might be thinking of buying their way in to streaming instead.

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Anonymous Coward

Re: That's what you do

You would think Apple would move into home automation or multi-room sound.

Having a z-wave system, Nest thermostat and a Sonos you can see there's a lot of money in these markets.

Yet Apple just seem to be protecting what markets they have now rather than push into new ones.

Tim Cook is an overpaid pratt.

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Re: That's what you do

For Apple to release new products or branch out from their current catalog would be just atrociously bad business. Like gross negligence, hire a Siberian Tiger as a nanny negligent.

You never, ever, under any circumstances dick with your offerings if they are still performing well. That's lemonade stand business basics. You don't do anything until the money slows down then you've got your war chest to keep things going.

The longer a product is produced the more its margins increase. Equipment and tooling are unbelievably expensive and if you change too fast you never get to stop writing me large checks.

Furthermore, you risk pulling the carpet from under your existing product if your new widget forces the customer to choose between buying another of the thing they don't mind buying, or the new thing.

There are lots of loudmouths out there screaming for Apple to do something new, but they don't have the business sense of a well polished moose turd. People that actually know what they're doing would pull their money out of Apple is a nanosecond if they started fixing what isn't broken. I know I would, and I'm pretty good at this stuff.

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Re: That's what you do

>You would think Apple would move into home automation or multi-room sound

When Android mobe makers LG and Samsung make fridges, air conditioners and the like... hmmm. But maybe. After all, they have sold 4" and 10" control surfaces to lots of people.

Multi-room sound. The little Apple Airports have featured a 3.5mm audio out for years. I don't know how well they work (e.g speakers in sync between rooms?), but it seems a 'good enough' solution for some.

>For Apple to release new products or branch out from their current catalog would be just atrociously bad business.

Respectfully Don, isn't that what they did with the iPod, iTunes and iPhone?

>The longer a product is produced the more its margins increase.

Yeah, all things being equal. But you usually have to drop the price after a while in order to meet the competition.

There was an interesting radio discussion the other day about how competition is supposed to reward efficiencies, so that the end game is that nobody makes any profits (as people suggest when thy talk about 'commodity phone makers'). The summary was that the only way to profit is to hold a temporary monopoly.

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Re: That's what you do

Apple isn't a product development company - they are a music download company.

They are buying the good doctor because of the company's download deals.

Expect them to start buying record labels and music studios next.

They are doing what Sony should have done in the 90s. Own the content, instead they bought studios to supply their low margin hw business.

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Re: That's what you do

Samsung and Apple are not remotely comparable companies. There is a single page in their catalogs where a few products overlap, but that's it. Apple would fail if they ran their business like Samsung and Samsung would fail if they went the Apple route. Both have perfectly valid models, they just aren't comparable. Samsung's latitude means they will probably last forever, long after the bottom falls out of consumer electronics. Apple will likely just disappear.

I'm not sure if you remember Apple before the iStuff, but they were useless. A money pit with no redeeming products and no love from anybody sane. Then they hit on the iStuff and the product sweet spot every company hopes for, but few ever achieve. You don't screw with that until it's broken beyond repair. You don't take a despised company that has to sue stores to get retail shelf space and turn it into the most valuable company on Earth in just a few years then go fiddling with it. It's a stupid risk, with little gain and a lot of downsides. There's no reason to hurry new products if you're on that situation, it's bad business.

All things are never equal in manufacturing. If you think Apple products are expensive you ought to see the price tags on bespoke manufacturing equipment. Even giant globocorps take years to pay off their equipment and even then it costs millions of dollars per year, per machine, just to keep them humming along like they do. It takes a few years, but once you've got a truly stable production line with no surprises left to uncover you can do anything you want with your pricing. Drop it a shit ton if you want, competitors with more fluid production lines simply can't get that level of cost control.

They are always paying (me, in many cases) big bucks to have existing equipment retooled to crank out new products or all new equipment built. We've got equipment going to China later this year that will take 7-8 months to get setup and dialed in, and we've been working on in for four years already. If you're radically changing products all the time you're always at least half a decade away from being able to control production costs without negatively affecting product quality. You've got a tiny amount of wiggle room and the company who has kept their catalog stable has enormous amounts of pricing latitude that you just can't compete with. They can undercut you in a second, and there's fuck all you can do about it. I'm not going to lower my prices, neither is anyone else in my field.

And that's why playing the pricing game is stupid. It's a short sighted consumer who thinks lower pricing and more sales is automatically good. It's great if you've got to generate revenue to cover your production expenses, but that has a ceiling that absolutely cannot be surpassed if you change products all the time. That's not opinion, or in some cases, or depends, that's an unchangeable, universal truth in manufacturing at scale.

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Anonymous Coward

Re: That's what you do

> If you think Apple products are expensive you ought to see the price tags on bespoke manufacturing equipment.

Do you even have a clue when comparing Samsung with Apple as manufacturing companies?

Disclaimer: I am neither an Apple fanboi nor a Samsung fanboi. I couldn't care less about either of them.

Apple is not a hardware manufacturing company: they do not manufacture any hardware. Everything with an Apple logo on it, and everything that goes inside an iProduct with an Apple logo on it, is outsourced to third-parties: Flextronics, Asus, Analog Devices, Dow Corning, etc. Not even your iPhone's USD $20 plastic case is made by Apple.

There's a very long list of Apple manufacturing suppliers here (Warning: PDF):

https://www.apple.com/supplier-responsibility/pdf/Apple_Supplier_List_2014.pdf

Most of them are in China.

So, when you talk about Apple's cost of retooling as a manufacturer, what exactly are you talking about?

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admin@razorfishsolutions.com.hk

You would have to be fairly thick to think that 're-tooling' costs are 'absorbed' by the manufacturers.

That would be like being able to print money for nothing.

Next up… apple DO manufacture, and because it is Apple, then it is not going to be on a Supplier-responsibility list is it?… because it would be a sub-division.

you appear to have a very limited outlook of what is encompassed by the term 'manufacturing'

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Anonymous Coward

If it rids the public transport networks of the world of those cheap and nasty white Apple earphones that leak "RnB" all over our buses and trains, it'll be money well spent. At any price.

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