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Beats' and Apple's Core Is Cooler Than Cool, Probably...

It's difficult for anybody to scratch their head when they're wearing a pair of headphones, but a lot of people have been doing exactly that when trying to analyse the $3.2 billion that Apple are reportedly paying for Dr Dre's Beats.

It's difficult for anybody to scratch their head when they're wearing a pair of headphones, but a lot of people have been doing exactly that when trying to analyse the $3.2 billion that Apple are reportedly paying for Dr Dre's Beats.

Some would call such a deal a Rorschach Blot in so much that those who believe that Apple has lost its way will see this as proof of the wrong detour, while others who still believe in Apple will assume there must be some other piece to the jigsaw. For the believers, these pieces may be TV or wearables, but something that will help to make this deal make sense.

Naturally, whenever it comes to Apple and its strategy after the demise of Steve Jobs, everybody has an instant opinion to what it means, hoping their particular vision will be seen as seminal, definitive and, er, visionary.

In such times, wisdom will prevail from what has already passed, as opposed to anything that may happen in the near future. In this case, the relationship between Apple and Beats already exists. Beats headphones feature prominently in Apple stores and the company's design studio is Ammunition, founded by Robert Brunner, ex-head of ID at Apple and better-known for hiring Jonny Ive.

Another aspect of business that the two companies have in common is their mutual genius at marketing. Apple's prowess in this area needs no introduction, but Beats has proved to be a worthy scion. They have owned the 'urban' market, as well as cornered a 'luxury' market with endorsements from major celebrities and influencers.

So both companies are incomparable when it comes to distribution, retail and marketing, what of the products themselves? The obvious elephant-stack in the streamed room is Spotify. Why would Apple acquire Beats when Spotify would be a perfect fit of software and hardware.

Perhaps these conversations have already taken place and the acquisition of Beats is a precursor to an even bigger deal, but we are also becoming guilty of spurious future-gazing by even suggesting so; better to concentrate on the deal in hand.

What Beats has done, apart from continually finesse its marketing nous, is to mass-produce excellent sound quality while maintaining high margins and a pricepoint for the customer that is reasonable, as well as bringing instant cool. It's a heady mix, something that Apple surely respects.

There is also a precedent here. The early iPhone cameras were poor and it wasn't until Apple acquired SnappyLabs that they markedly improved. Audio expertise is not something that Apple excel in and this acquisition may be a similar play.

Again, this is all conjecture. Beats has a distinct style that is not typical of the majority of hardware coming from Apple and, for many people, the design of Beats headphones is mass-market style over substance when compared to products from Sennheiser, AKG or Bowers and Wilkins.

Jeremy Offer is Industrial Design Director at product and service design agency Great Fridays that works with a number of marque audio brands. He has an interesting, and authoritative, take on the Beats acquisition.

"As far as sound quality goes, Beats isn't that well respected in the HiFi world. The main criticism is that they have catered for a mass-market that thinks pushing the EQ all the way to 'eleven' represents good sound quality.

"I'm sure if you asked other audio brands what they thought of Beats audio quality, you would get a fairly terse response even allowing for an element of HiFI snobbery and maybe a bit of jealousy over its success. As for Apple's audio quality I would suggest that their audio chipset is very well regarded; it's the earbuds that let it down.

"The purchase must be for the streaming service. Their hardware is definitely more style/brand over substance. Definitely not something that is part of Apple's design DNA. I don't think they will try to integrate the headphones and speakers into apples product line.They will let these continue independently," he says.

The software is more interesting; Beats has a algorithm that allows users to input explicit subjective data on how a song makes them feel and find songs based on this subjectivity. Beats is boldly asking users for this data and leveraging it as a core user interface.

The battleground for digital music has been a convoluted one. Apple's hegemony has declined since the halcyon days of 2008 when music sales per account were $16 million per user; this year that figure is likely to be less than a dollar per user.

iTunes has never moved beyond buying and downloading to streaming, a huge mistake in a world that has become streaming-obsessed. Apple wants to ring fence its ecosystem, but it may be too late. When Carlyle made a $500 million investment in Beats in September last year, it valued the company at around $1 billion, so Apple is paying a big premium for a big punt.

Whether it's a head-scratching deal, a Rorschach Blot or even a shot in the dark, Apple's decision to buy Beats is going to keep everybody guessing; maybe that is Apples underlying strategy. Well, at least the 'visionaries' are happy about that.

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