The more closely you look at Beats, the more they make sense as a serious asset to a consumer electronics company, and the less plausible the "Apple just needed to get a streaming service off the ground" story is.
Two more angles to consider:
* Owning Beats puts Apple hardware on the heads of a huge fraction of every mobile user, whether they use iOS or not. Having a Beats brand affinity for those users makes it easier to introduce new products to them.
* Owning Beats gives Apple access to Beats sales channels; whatever retail real estate Beats has is now controlled by Apple.
My theory on confusion over the Beats purchase is that Apple fanboys have a reluctance to admit that Apple is significantly a fashion company. Not the beacon of technical excellence(asterisk) they set it up to be in their mind.
The reality is that Beats is also primarily a fashion company. Also with a strong brand. Also with a product line that sells at a high markup. They go together like pancakes and maple syrup. If Apple puts Beats headphones in their stores they will sell just as much as they do now. Why wouldn't Apple want a slice of that profit?
And if they make a next generation Beats headphone that can only be used with Apple products? Well, that's even more money.
Edit: asterisk: which is not to say that Apple lacks technical excellence, but the reason why they are so successful is not their engineering credentials, it's because they are able to marry aesthetics and engineering.
To the extent that you can say the exact same thing about Porsche, I agree; just bear in mind that it takes more than a sense of style to execute on "Porsche".
But also look how Apple integrates downmarket. To a first approximation nobody's first car is a Porsche, but the less expensive iPhones are viable first smartphones. There's something powerful about being able, at least in theory, to address the whole market that way. Porsche probably can't change the way everyone engages with cars, but Apple can do that with mobile.
Sure, sure. But that's true of nearly all "fashion" brands, even Beats (though less so compared to Porsche or Armani or omega watches). There's nothing wrong with iPhones or apple products in general, they make some very good products. Pretending that fashion isn't a big reason behind the popularity of Apple products in general is silly.
I would suggest that it's more that an upmarket of mobile phones doesn't really exist right now. Pretty much everyone has the same thing. Who's the Porsche or the Rolls of mobile? To a first approximation, much of the first world can afford a 5S if they really want one. Vertu? Heh.
Yeah, but a Vertu is excessive, just as a Porsche. Normcore is the word. You have to look just better than your peers, not everyone at once. So, even though a lot of people couldn't affort a pricier phone than the 5S, even those who can afford a Vertu stay on the 5S and spend on other accessories.
"have a reluctance to admit that Apple is significantly a fashion company. Not the beacon of technical excellence they set it up to be in their mind."
This is a false dichotomy, the idea that Apple is either a fashion company or a Tech leader. Why can't they be both? Yes they make products that are fashionably designed but, IMO, they are clearly also a leader if not the leader in consumer technical excellence.
I think you're misreading what I'm saying. I'm not saying that Apple is just a fashion company. I'm saying that a lot of folks, especially the silicon valley alpha geek types, who are die hard Apple fans try to rationalize their preferences in a way that excludes the fashion aspect out of a sense of embarrassment or what-have-you.
A lot of people, including myself, like Apple products less so for the design and more for the actual technical qualities. They make the best laptops by far. The operating system marries UNIX with ease of use like nothing before. There is genuine attention to detail in their software that Microsoft or Ubuntu simply doesn't have.
I am sick to death of idiots like you who dismiss my choice as being "fashionable".
No I won't edit it. Painting someone's decision as "fashionable" is a form of condescension. It's hilarious that HN doesn't see this kind of behaviour as a personal attack and downvote accordingly.
I found the comment condescending too, but found a way to reply to it that didn't involve spreading poison on the thread. You didn't. You're going to be happier on HN if you can internalize the idea that direct personal attacks are counterproductive. You did a disservice to your own argument.
It's perfectly possible to become a customer of a company based solely on objective appreciation of the qualities of its products, but that doesn't stop it from being a fashion company. A lot of people, like you apparently, want to pretend that Apple is not a fashion company to even the slightest degree when, of course, fashion has always been a big reason for the company's success.
as a mac user and ubuntu user.. the fact that mac still requires managers like macports/finch/homebrew make me question the "marries UNIX with ease" statement.
If you're a terminal nerd you have to go through a couple extra steps with OS X that you don't with Ubuntu, sure. But if you're the sort of person who gives a flying fig about the kinds of programs homebrew installs for you, are you really going to scream, "WHAT? I have to spend five or six minutes installing Xcode's command line tools and the Homebrew package manager? THIS IS UNACCEPTABLE!" and flip over the table in rage?
Which fashion companies design their own programming language, design their own CPUs, lead the industry in hardware manufacturing, produce innovative security features like TouchID etc. None. They are a product and services company who care about design. It really isn't hard to see that they contribute just as much to the IT industry as Microsoft or Google.
I think the term you might be looking for is product excellence. Apple rarely do technology for the sake of technology, they do it for the improvement of their product from the customer's point of view. They do appredciate good design, but that doesn't make them a fashion company, it makes them a company who scrutinises every aspect of the product, not just the spec sheet and I personally really appreciate that.
Apple's original success does not stem from fashion, but rather from their OS being the most accessible alternative to Windows for non-technical users--driving huge profits selling hardware.
Early iPods did not have a significant leg up over other MP3 players in terms of usability, other MP3 players at the time hearkened back to the Walkman, which nearly all non-technical consumers were perfectly comfortable with and capable of using.
The big gain there was that the iPod had a modern design, not a design dating back to the 80s.
Edit: The clickwheel was an improvement, but it wasn't like consumers were confused or apprehensive about using the alternatives at the time. We were not like the proverbial grandmothers struggling to check their email in Windows XP; they understood the other products just fine.
The click wheel was good, but it wasn't like consumers were confused by the alternatives. With PCs you could make the case that most consumers struggled to use windows at the time, but hand-held media players haven't had that problem since the 80s.
The problem with the alternatives wasn't that they were "confusing". They were just bad.
I remember trying to find a song on my Rio. It took forever. It was pointless. I came to the conclusion my best bet was to build Playlists, on my computer, and use those.
The iPod's interface made finding songs, artists, albums, etc effortless.
Just because an interface isn't confusing doesn't mean it's any good.
You're a smug asshole, aren't you. The reason they are so successful is the technology falls by the wayside; that's how advanced they are. Just because you get off rooting your phone doesn't mean they're not the leaders in technical excellence.
> Owning Beats puts Apple hardware on the heads of a huge fraction of every mobile user
You might be on to something here. What if Apple's plan is to make the headphone itself a network enabled device with access to the app store?
While headphones are currently 'dumb', there's no reason it has to continue to be the case. Network enabled watches. Network enabled headphones. Network enabled glasses. If Apple get's the leading brand in all these categories, then making the leap just suddenly became a lot easier.
Maybe. Generally, though, I'm just saying: you should look at all the elements of the business: the promotion strategy, the user base, the product positioning, the distribution and sales channels, the supply chain (as Khoi Vinh points out), the integration story... and the competitive tensions in all those places. You can't just look at the feature/function/benefit table and make a snap judgement; the feature/function/benefit list of a billion dollar business is rarely the whole story.
high-margin headphones and iPods are complimentary products, integrating an iPod into Beats is essentially making an iPod free - which is a good thing if you own Beats
Maybe it's not watches, but headphones? Siri + speakers you're already wearing. Health-wise, it must be beneficial to be close to the head opposed to the wrist. Maybe.
Two more angles to consider:
* Owning Beats puts Apple hardware on the heads of a huge fraction of every mobile user, whether they use iOS or not. Having a Beats brand affinity for those users makes it easier to introduce new products to them.
* Owning Beats gives Apple access to Beats sales channels; whatever retail real estate Beats has is now controlled by Apple.