Apple Beats By Dr Dre: Acquiring A Big Brand With A $3.2-Billion Price Tag; What’s In It For Companies With Nothing To Lose?
Speculations persist about Apple Beats by Dr Dre, if the acquisition will actually push through. Industry insiders offer good reasons for the buyout.
The $3.2-billion price tag on Beats is Apple's biggest offer to date, over a headphone brand that's more on style than substance. Beats' sound quality is exceptional, but is mid-range compared to premium alternatives like Bose and Sennheiser.
The acquisition would make Dr Dre the first billionaire rapper, and a recent Financial Times report validates Apple's push to buy the brand. Acquiring well-known brands is unbecoming of Apple, with its history of favoring companies with novel and innovative ideas, products, and technologies. Case in point: Siri was acquired in 2010, before it even became familiar.
Apple's most expensive acquisition to date is Anobit in December 2011. Tagged at $390 million, the Israeli company was a standard in solid-state chip manufacturing. The Beats buyout would bring Dr. Dre and Jimmy Iovine into the fold, both to be credited for the brand's dominant presence in the music industry.
The genius of the brand is in its marketing; Dre and Iovine reintroduced over-ear headphones into the music scene, especially in rap. In time, artists were wearing their own custom-brand of Beats in videos, on stage, in shows, in public. Beats has become a benchmark in the US and the UK, all in a span of six years.
Unpredictable product placements also help boost the Beats brand. The duo managed to sidestep the 2012 London Olympics' sponsorship regulations which offered exclusive rights to official sponsors. Beats earphones and headphones were handed out to athletes, who then wore these in plain sight, before and after competitions (check out this article for the full report).
Apple plans to carve its way into a saturated smartphone market, and Beats is instrumental in the sense that the brand sits well with both mobile and smartphone devices. Price points suffer with the competition, and the tie-up between Apple Beats by Dr Dre should earn both popular favor, to Apple's benefit (theguardian.com).
