The Beats acquisition isn’t about headphones, its about Android; Apple Now Makes Apps For Other Mobile Platforms – Which Could Be Huge For The Future Of Media

End to End: The Beats acquisition isn’t about headphones, its about Android.

To make sense of the Beats deal, stop looking at Beats and start looking at Apple: Apple doesn’t care about selling music[1]. Apple doesn’t care about selling headphones[2]. Apple cares about selling phones, tablets and computers.

So why buy a headphone and music company?

To sell more iPhones, iPads and Macbooks.

Apple is at war for the future of computing with Android.

Android is as much an opposing army you fight during the day as a ghost you fight in your dreams. Android has the massive armies of Google and Samsung assembled on the front lines but Android isn’t just a threat materialized, its a shape-shifter; a Microsoft fork, a Facebook phone. Android is everywhere and can become anything, so the threat to Apple can come from anywhere.

But Android’s biggest advantage is its biggest weakness: Things that can be anything are usually many things but seldom the best thing.

Apple thrives by making experiences simple. They stay focused. They create integrated systems. Apple wins by blending hardware and software into one package that just works.

Apple is buying Beats to make streaming work. Well not just work, but work delightfully.

Buying Beats is about giving everyone that purchases an Apple device a bundled, simple, seamless, end to end system for listening to any song in the world easily and instantly right out of the box.

Apple is all about music. Apple owns digital music sales. Apple has had concerts at their product announcements. Music brought Apple out of the ashes.

Listen to Steve Jobs talk about music when he introduced the iPod.

Why music? Well, we love music. More importantly, music’s a part of everyone’s life. Everyone. Music’s been around forever. It will always be around. And, because it’s a part of everyone’s life, it’s a very large target market. All around the world. It knows no boundaries.”

Apple is working to perfectly meet a universal desire of their users and baking it into every product they sell.

So why buy Beats?

Beats is a special company when it comes to licensing. Licensing is a beast. Even for major players like Google licensing can take years. Many contracts don’t allow for transfer of rights on acquisition. Beats’ deals are probably the same but Beats isn’t just any company. The CEO of Beats works at Universal and reports directly to the CEO. One of the major funders of Beats is the owner of Warner. Even if Sony isn’t involved Jimmy can navigate those waters.

Beats is cool. Apple isn’t just offering access to songs — they are making it cool. Not only is Beats a cool brand, but Beats has the artist involved (and you can bet many many more will be there soon now that Jimmy and Dre are staying at Apple).

Beats music is already great product. Its clean, fast and already works. While Apple understands the need for simple integrated systems, they don’t always execute perfectly and buying a functioning product removes the opportunity for another Maps or .Me disaster.

Apple needs streaming. Google Play is already embedded on many Google Devices. Amazon will have their content front and center on their phone just like they do on the Kindle Fire. Apple, like they have been many times before, is behind on integrating new features into their platforms but they’ve made up for it before.

By buying Beats Apple gets the sexiest product in a universally important space and the ability to bundle it inside every device they sell.

Buying Beats isn’t about selling headphones or selling music: Its about giving their customers an simple, beautiful, integrated customer experience with no risk. Its about bundling every song in the world with every product they sell.

Buying Beats is about beating Android.

[1] iTunes is somewhere around $6B/year. Thats including music, software, movies, apps, everything.

Apple makes 30% of those sales. Maybe they have a great deal and have 15% cc fees. So they make $900M a year top line.

Apple made $10B in profit last quarter.

This isnt about selling music.

Buying a streaming company costs Apple money.

Its actually more cost effective to let Beats grow outside of Apple.

Apple would make 30% of every Beats transaction processed on their platform and they would make 30% of every Spotify transaction and 30% of everyone else.

If they owned them, 80% of revenue would go to the labels.

This is’t about selling music.

[2] Apple makes the best hardware in the world. Apple has the worlds most valuable, desired and important brand.

This isn’t about selling headphones.

 

Apple Now Makes Apps For Other Mobile Platforms – Which Could Be Huge For The Future Of Media

Posted yesterday by Darrell Etherington (@drizzled)

Apple became something more with the Beats acquisition today – a multi-mobile platform developer at least for the time being. The company will continue to operate Beats Music on Android and Windows Phone, Apple CEO Tim Cook tells The Financial Times’ Tim Bradshawfollowing the acquisition.

While Apple has offered iTunes for Windows in the past, this marks the first time that an app it runs, even through a subsidiary, will be available on a rival mobile OS. Apple says it’s “all about the music” when addressing this change of practice, and it marks a departure that could become very significant as we think about what this deal means for the future of digital media.

The Apple acquisition of Beats is said to be primarily about the streaming service, according to a source familiar with the deal, and the Beats brass team will be reporting to Eddy Cue, we’re told. That provides lots of support for the theory that Beats will help in part to transition iTunes from digital downloads to a streaming-based economy.

What’s most interesting here, however, is that Apple has secured a multi-platform foothold in streaming – one that iTunes Match didn’t really help it to achieve, especially with regards to the mobile ecosystem. Apple might still champion and make the vast bulk of its money on iOS and the iPhone, but if it wants to continue to dominate the digital music and media industry for the next decade in the same way it has the last, it needs to look further afield.

From the horse’s mouth, via a Tim Cook internal memo to Apple employees published by 9to5Mac:

Apple’s history in music began with selling Macs to musicians. That remains important to us today, but we also bring music to hundreds of millions of customers with iTunes, which is at the forefront of the digital music revolution. Music holds a special place in our hearts at Apple, and we know that we can make an even bigger contribution to something that is so important to our society. That’s why we have kept investing in music and why we’re bringing together these extraordinary teams — so we can continue to create the most innovative music products and services in the world.

Cross-platform has long been a defense that streaming media companies have thrown up against the threat of efforts by industry giants like Apple. If Apple sticks to Cook’s stated plan to offer Beats Music across a range of devices, that may no longer be a valid point to hide behind.

We reached out to Apple to find out if in addition to remaining available, the Windows Phone and Android Beats Music apps would continue to be actively developed, but we had received no response at press time.