If you listen closely, you just might hear the bass-heavy sound of the rumors that Apple will purchase Beats, the boldly-colored headphones company pioneered by Jimmy Iovine and Dr. Dre. Despite the pedigreed reporting by the Financial Times, I’m pretty skeptical that this acquisition is in the cards. As best as I can tell, here are the reasons why Apple wouldn’t spend $3.2 billion on Beats, as well as one reason why it might:
Why It Wouldn’t
1.Apple has a pretty defined purchase pattern: it buys small companies in the $50 million to $300 million range that produce the technological hardware or software that Apple needs to execute iterative advancements – think Siri, fingerprint recognition, flash memory, etc. In purchasing Beats, Apple would vastly exceed its previous spending range, as well as the type of company it would purchase. It’s the sort of thing that, if I were Apple’s credit card company, I’d give them a call to make sure their card wasn’t stolen.
2. Beats doesn’t fit cleanly into Apple’s portfolio. Apple likely isn’t expanding its headphone business – or at least not in a way that it needs Beats – and it seems unlikely that it would acquire Beats for its newly-launched streaming music service. Apple has a rightly-deserved reputation has a hard-bargainer with both music labels and cell phone carriers, and I doubt that they’ll acquire Beats just for the rights to compete for effectively with Spotify and Pandora.
3. This is way more public than any previous Apple purchase announcement. It seems like speculation, nothing more.
1. The new iPhone 5C is made of brightly-colored plastic. Beats are, too. Now, where’s that checkbook?