What Does Apple Gain by Purchasing Beats?
Beats is one of the most successful headphone companies. It has become extremely popular--especially with the younger generation--in only five years. Apple recently declared that they wish to buy Beats for 3.2 billion dollars. In Apple’s history, there has never been such a big potential purchase: the last big trade they had was in 1997, when they bought NeXT. The purchase both made Steve Jobs come back to Apple and brought Apple to its golden age.
While it’s hard to determine Apple’s reasons for making such a big purchase, we can guess its benefits.
First of all, Beats and Apple have a very similar design. Apple always tries to balance ease-of-use with simplicity, and Beats has been teaching the entire world how headphones can be fashionable. The simple monogram B made people fall in love with their design. Headphones can last a really long time; the only way to convince people to buy a new pair is to make them trendy.
Additionally, Beats as a company earns a lot of money--approximately one billion dollars per year. Within a few years Apple will earn back its initial investment. Plus, its income is still increasing: by the time Apple buys it, its profit will have grown. Apple has always been good at co-marketing its products. For instance, iCloud relates all OS and IOS devices in order to convince customers to buy them all. If Beats headphones were to be specifically designed for Apple, there will surely be an increase in customers.
Finally, I want to mention celebrity-based publicity. Dr. Dre is the current CEO of Beats as well as one of the most famous rappers ever. Beats has created an enormous amount of publicity through famous people from all sorts of fields, which has contributed to its success. Endorsements would be a new form of publicity for Apple. Usually—especially during the Jobs Age—Apple relied on word-of-mouth advertising: making customers convince other people to buy Apple products.
All of these points are just possibilities, of course. Hopefully, we will find out the real reasons soon.
By Michael Chen (with Additions by Malaika Handa)