6 ms·

Dr. Dre Appears to Confirm Apple-Beats Deal in Facebook Video

32 points by bjansn 12y ago

sarreph 12y ago
Not only is Dre the first billionaire in hip-hop, but also the first rapper to (unofficially) announce a multi-billion dollar acquisition with such swag.
digitalengineer 12y ago
After two years and spending 300 million for a 51 percent stake, HTC sold their (now) 25% stake for just 265 miljoen. And a year later Apple buys it all for 3.2 billion. Wow... (edit: spelling)
kevin818 12y ago
This is big. Although to be honest I'm still trying to understand how a company that sells quality stuff is buying the headphones that most audiophiles think is meh. Is all this really just for the name?
- wging 12y ago
  This confused me too, but the quality of the headphones that come with Apple's products is not reputed to be great either. (I can't say whether this is true. Hearsay at best.)
  - CodeWithCoffee 12y ago
    The old Apple headphones were average (for their price), but overall the newer EarPods are much, much better.
  - taiki 12y ago
    EarPods are quite decent and the design is very ingenious. However, the response is pretty neutral. I'd imagine the Beats acquisition is probably at least in part to make better headphones. I don't know if Beats' streaming licenses are transferrable.
- digitalengineer 12y ago
  It's about the streaming music service: http://www.digitaltrends.com/mobile/beats-music-vs-spotify/#!LqZbk http://www.digitaltrends.com/mobile/beats-music-vs-spotify/#...
  - brown9-2 12y ago
    1. Isn't it likely that any streaming rights are cancelled in case of acquisition? That seems like a no-brainer for the music execs to put in a contract. 2. And aren't streaming rights only good for a few years anyway?
    - ianhawes 12y ago
      Not to mention, Rdio destroys Spotify and Beats Music on all levels.
- gurkendoktor 12y ago
  Apple's iPod division was always more fashion-based than the rest of the company. Now that iPod sales are declining, maybe the fashion aspect will live on in the headphones?
  - kevin818 12y ago
    Never looked at it that way. Great point!
- JonnieCache 12y ago
  Audiophiles already think ipods sound meh. Which they in fact do, it is a fact that the DACs aren't great. Neither are the headphones that ship in the box. Apple products are not marketed on their audio fidelity.
  - JoeAltmaier 12y ago
    Not quite true - Mac desktops are marketed as audio processing units. They even come with the software preinstalled. They took pains to make the mic-speaker loop low-latency so you could listen to yourself as you record. Since other products are all about the audio experience, it does seem strange that the iPod, the device which most of humanity uses to experience music, does such a poor job. And Apple doesn't care. And neither do the people listening. Strange.
    - JonnieCache 12y ago
      The inbuilt microphones do work very well. The whole loop is, as you say, heavily adjusted to compensate for the resonances of the unit. I wouldn't be surprised if there was some quite fancy DSP powering that. I thought that was for making facetime and skype etc work well though? Musicians are not using the built-in audio interface, regardless of quality considerations, it lacks the necessary functionality.
    - bananas 12y ago
      I don't buy that. Everyone I know has a sub $100 USB interface hanging off their machine and swears constantly at the latency and wishes they'd just stuck with ASIO on Windows... Personally I still have a workstation... As for the iPods they sound horrible. The latest line of nano has noticeable noise on the outputs.
      - JoeAltmaier 12y ago
        Since Windows Vista there has been 100ms latency added to the audio loop. So you're experience was Xp? Keep that machine around. USB interfaces are a terrible idea - they are polled and add latency every time.
AlexMuir 12y ago
All FB and Instagram content seems to now be deleted. Probably learned from 50cent's Twitter stock-ramping faux-pas a few years ago [1] Probably makes it more likely to be happening. If true, this makes sense framed as an acquihire. $3.2bn to bring in Dre, a music industry genius and Jimmy Iovine, a highly influential label boss. iTunes is at risk of aging - kids' parents use it. It may be that Apple recognises the need for a brand for a younger, cooler audience who don't want to buy an MP3 file. Apple has the money but pulling labels (and artists) over to a viable subscription business model is going to take clout, influence and reputation. I expect Dre will shortly be rapping about his unforgettable journey. [1] http://www.theguardian.com/business/2011/jan/11/50-cent-ramps-stock-on-twitter http://www.theguardian.com/business/2011/jan/11/50-cent-ramp...
- littlemerman 12y ago
  That video seemed to be a confirmation.
- brianbreslin 12y ago
  Maybe the average person doesn't care to own/permanently store music, thus the reason apple isn't putting out giant iPods anymore.
- prawks 12y ago
  > iTunes is at risk of aging - kids' parents use it An angle I didn't originally think about, but I think this is a big one. Apple has seen how Facebook has aged, and may be trying to avoid the same thing.
Kudos 12y ago
The video in question skipped ahead to the important piece https://www.youtube.com/watch?v=guMFKBXp544#t=46 https://www.youtube.com/watch?v=guMFKBXp544#t=46
Thriptic 12y ago
Maybe when Dre is an Apple employee they can force him to finally release Detox ;p
- jordanthoms 12y ago
  Yeah, but Jony Ive is gonna design the cover.
kyro 12y ago
While this makes little sense on the surface, I suspect the folks at Apple are far from stupid. There's likely a solid reason behind this move, and instead of doing the easy thing by saying "b-b-but their headphones are crap!", it'd be more productive to explore the underlying motives. I actually think this is a smart move. Beats first and foremost is a fashion company. The majority don't buy Beats for sound quality, but for the style and image. I see people wearing Beats in all sorts of colors every day on the train. NBA players are seen sporting them at practice or in the locker room. It has become the fashion icon for audio-wear. In the context of Apple's recent fashion-binge with hires from Burberry and YSL, this move may provide further evidence of Apple creating/entering the wearable-tech fashion market. This could also be a response to Apple losing ground in music streaming. Rdio, Spotify have become the default source of music for so many, I wouldn't be surprised if Apple has seen a hit to their music sales. They also botched social music up with Ping, which is an area the aforementioned services are doing pretty well in. Beats may have the connections, the brand and marketing capital, to help make Apple a formidable competitor in this area. But I read here yesterday that the Beats streaming service only has 200,000 low-quality subscribers (ie they joined because their phones came preloaded with the service), so I'm less inclined to believe Apple dropped 3.2 billion on them for this alone. Maybe it's a combination of both, or for a different reason altogether. It's intriguing, nonetheless.
- wiremine 12y ago
  > Beats first and foremost is a fashion company. This is the key. I would add it isn't just a fashion company, it is a _premium_ fashion company. I did a quick look at Amazon [1], and the price points are fairly solid: $99 to $299 for over-the-ear headphones, and around $45 for the in-ear models. I doubt Apple could get away with this level of mark-up if they entered the headphone space. They have a solid markup on their accessaries, but I doubt the margins are similar. Taking a step back, I wonder what Angela Ahrendts [2] is going to do with this brand. Is the beats brand part of their iWatch strategy? [1] http://www.amazon.com/s/ref=nb_sb_ss_i_0_5?url=search-alias%3Daps&field-keywords=beats%20by%20dre&sprefix=beats%2Caps%2C214&rh=i%3Aaps%2Ck%3Abeats%20by%20dre http://www.amazon.com/s/ref=nb_sb_ss_i_0_5?url=search-alias%... [2] http://www.apple.com/pr/bios/angela-ahrendts.html http://www.apple.com/pr/bios/angela-ahrendts.html
steve_benjamins 12y ago
Videos like this should become standard for any major SV acquisition!
- imjk 12y ago
  For a long time, people carrying Macbooks were seen in the same light as those that are seen wearing Beats headphones: suckers who bought over-priced (ostensibly premium) commoditized hardware with superior marketing. Perhaps these companies aren't so different.
pbhjpbhj 12y ago
When I see someone wearing Beats I think "there's someone who overpaid" - those are the people Apple want to continue attracting, I guess that's behind this? But the price, seems steep.
- stackcollision 12y ago
  You don't need to be overpaid to buy expensive image-"enhancing" crap, you just need to be very stupid about managing your money. I see plenty of people on the subway wearing Beats who don't look like they could buy their next meal. I'm sure there is at least one person in the world who has spent money from their third mortgage on those things.
loso 12y ago
Really weird to see the intersection of hip hop and tech on HN so much this week. I love it. I understand why Beats are popular. They sound great with bass driven music. Its like when people put Bazooka sub woofers in their cars in the 90s. Yeah audiophiles and older people hated them but they sounded great with bass driven hip hop. I still haven't figured out Apples play here. I'm starting to think its a best of both worlds with the earphone tech and the subscription services. I think they wanted them both equally hence the huge number.
kitsune_ 12y ago
This is boggling my mind, it surely can't be about quality. I bet Apple could have bought AKG, Audio Technica or Beyerdynamic for less than 3.2 Billions.
- onedev 12y ago
  Which one of those companies commands 59% of the headphone market over $99, did $1 Billion in revenue last year, and has sky-high margins and gets mass market consumers to pay top dollar for headphones? Exactly.
  - johnward 12y ago
    it's about the brand and the beats brand is strong.
- Anechoic 12y ago
  They don't even need to buy one of those firms, they have some pretty sharp audio/acoustics guys working for them (including THX founder Tomlinson Holman), they could easily design premium audio products in-house. It can't be about the headphones.
imjk 12y ago
I can't believe no one has yet mentioned that Samsung just last week announced that they were entering the "Premium Mobile Audio Products" market. This likely has nothing to do with Beats' crappy streaming music software, and more to do with holding market share in Apple's main niche: fashionable hardware.
iambateman 12y ago
Beats headphones are crap, sure. And their streaming service isn't as mature as Spotify. But three billion dollars isn't about headphones or online music streaming or Dr Dre's drunken celebration. It's about growth. Apple has a chokehold on the iPod market. They've rocked the market with the iPod, iPhone, iPad and those products will be cash cows for a long time. But where is their next growth going to come from? A watch? I doubt it. All the granola 16-year-old white girls already have their iPhone. There's no room for crazy growth among middle class white people. Apple needs to use it's expertise to pursue new markets, which is exactly what they're doing. Tim Cook isn't afraid, he's strategic. Beats by Dre is a high-end consumer lifestyle brand that GREATLY appeals to black, hispanic, urban-context, young men and women. They sell expensive products. They care about design. They represent a way of living. They're Apple in another market. Beats is about to be Apple's international foray into a completely new growth segment. And it's genius.

32 points by bjansn 12y ago

Not only is Dre the first billionaire in hip-hop, but also the first rapper to (unofficially) announce a multi-billion dollar acquisition with such swag.

digitalengineer 12y ago

After two years and spending 300 million for a 51 percent stake, HTC sold their (now) 25% stake for just 265 miljoen. And a year later Apple buys it all for 3.2 billion. Wow... (edit: spelling)

kevin818 12y ago

This is big. Although to be honest I'm still trying to understand how a company that sells quality stuff is buying the headphones that most audiophiles think is meh. Is all this really just for the name?

wging 12y ago
This confused me too, but the quality of the headphones that come with Apple's products is not reputed to be great either. (I can't say whether this is true. Hearsay at best.)
- CodeWithCoffee 12y ago
  The old Apple headphones were average (for their price), but overall the newer EarPods are much, much better.
- taiki 12y ago
  EarPods are quite decent and the design is very ingenious. However, the response is pretty neutral. I'd imagine the Beats acquisition is probably at least in part to make better headphones. I don't know if Beats' streaming licenses are transferrable.
digitalengineer 12y ago
It's about the streaming music service: http://www.digitaltrends.com/mobile/beats-music-vs-spotify/#!LqZbk http://www.digitaltrends.com/mobile/beats-music-vs-spotify/#...
- brown9-2 12y ago
  1. Isn't it likely that any streaming rights are cancelled in case of acquisition? That seems like a no-brainer for the music execs to put in a contract. 2. And aren't streaming rights only good for a few years anyway?
  - ianhawes 12y ago
    Not to mention, Rdio destroys Spotify and Beats Music on all levels.
gurkendoktor 12y ago
Apple's iPod division was always more fashion-based than the rest of the company. Now that iPod sales are declining, maybe the fashion aspect will live on in the headphones?
- kevin818 12y ago
  Never looked at it that way. Great point!
JonnieCache 12y ago
Audiophiles already think ipods sound meh. Which they in fact do, it is a fact that the DACs aren't great. Neither are the headphones that ship in the box. Apple products are not marketed on their audio fidelity.
- JoeAltmaier 12y ago
  Not quite true - Mac desktops are marketed as audio processing units. They even come with the software preinstalled. They took pains to make the mic-speaker loop low-latency so you could listen to yourself as you record. Since other products are all about the audio experience, it does seem strange that the iPod, the device which most of humanity uses to experience music, does such a poor job. And Apple doesn't care. And neither do the people listening. Strange.
  - JonnieCache 12y ago
    The inbuilt microphones do work very well. The whole loop is, as you say, heavily adjusted to compensate for the resonances of the unit. I wouldn't be surprised if there was some quite fancy DSP powering that. I thought that was for making facetime and skype etc work well though? Musicians are not using the built-in audio interface, regardless of quality considerations, it lacks the necessary functionality.
  - bananas 12y ago
    I don't buy that. Everyone I know has a sub $100 USB interface hanging off their machine and swears constantly at the latency and wishes they'd just stuck with ASIO on Windows... Personally I still have a workstation... As for the iPods they sound horrible. The latest line of nano has noticeable noise on the outputs.
    - JoeAltmaier 12y ago
      Since Windows Vista there has been 100ms latency added to the audio loop. So you're experience was Xp? Keep that machine around. USB interfaces are a terrible idea - they are polled and add latency every time.

AlexMuir 12y ago

All FB and Instagram content seems to now be deleted. Probably learned from 50cent's Twitter stock-ramping faux-pas a few years ago [1] Probably makes it more likely to be happening. If true, this makes sense framed as an acquihire. $3.2bn to bring in Dre, a music industry genius and Jimmy Iovine, a highly influential label boss. iTunes is at risk of aging - kids' parents use it. It may be that Apple recognises the need for a brand for a younger, cooler audience who don't want to buy an MP3 file. Apple has the money but pulling labels (and artists) over to a viable subscription business model is going to take clout, influence and reputation. I expect Dre will shortly be rapping about his unforgettable journey. [1] http://www.theguardian.com/business/2011/jan/11/50-cent-ramps-stock-on-twitter http://www.theguardian.com/business/2011/jan/11/50-cent-ramp...

littlemerman 12y ago
That video seemed to be a confirmation.
brianbreslin 12y ago
Maybe the average person doesn't care to own/permanently store music, thus the reason apple isn't putting out giant iPods anymore.
prawks 12y ago
> iTunes is at risk of aging - kids' parents use it An angle I didn't originally think about, but I think this is a big one. Apple has seen how Facebook has aged, and may be trying to avoid the same thing.

Kudos 12y ago

The video in question skipped ahead to the important piece https://www.youtube.com/watch?v=guMFKBXp544#t=46 https://www.youtube.com/watch?v=guMFKBXp544#t=46

Thriptic 12y ago

Maybe when Dre is an Apple employee they can force him to finally release Detox ;p

jordanthoms 12y ago
Yeah, but Jony Ive is gonna design the cover.

kyro 12y ago

While this makes little sense on the surface, I suspect the folks at Apple are far from stupid. There's likely a solid reason behind this move, and instead of doing the easy thing by saying "b-b-but their headphones are crap!", it'd be more productive to explore the underlying motives. I actually think this is a smart move. Beats first and foremost is a fashion company. The majority don't buy Beats for sound quality, but for the style and image. I see people wearing Beats in all sorts of colors every day on the train. NBA players are seen sporting them at practice or in the locker room. It has become the fashion icon for audio-wear. In the context of Apple's recent fashion-binge with hires from Burberry and YSL, this move may provide further evidence of Apple creating/entering the wearable-tech fashion market. This could also be a response to Apple losing ground in music streaming. Rdio, Spotify have become the default source of music for so many, I wouldn't be surprised if Apple has seen a hit to their music sales. They also botched social music up with Ping, which is an area the aforementioned services are doing pretty well in. Beats may have the connections, the brand and marketing capital, to help make Apple a formidable competitor in this area. But I read here yesterday that the Beats streaming service only has 200,000 low-quality subscribers (ie they joined because their phones came preloaded with the service), so I'm less inclined to believe Apple dropped 3.2 billion on them for this alone. Maybe it's a combination of both, or for a different reason altogether. It's intriguing, nonetheless.

wiremine 12y ago
> Beats first and foremost is a fashion company. This is the key. I would add it isn't just a fashion company, it is a _premium_ fashion company. I did a quick look at Amazon [1], and the price points are fairly solid: $99 to $299 for over-the-ear headphones, and around $45 for the in-ear models. I doubt Apple could get away with this level of mark-up if they entered the headphone space. They have a solid markup on their accessaries, but I doubt the margins are similar. Taking a step back, I wonder what Angela Ahrendts [2] is going to do with this brand. Is the beats brand part of their iWatch strategy? [1] http://www.amazon.com/s/ref=nb_sb_ss_i_0_5?url=search-alias%3Daps&field-keywords=beats%20by%20dre&sprefix=beats%2Caps%2C214&rh=i%3Aaps%2Ck%3Abeats%20by%20dre http://www.amazon.com/s/ref=nb_sb_ss_i_0_5?url=search-alias%... [2] http://www.apple.com/pr/bios/angela-ahrendts.html http://www.apple.com/pr/bios/angela-ahrendts.html

steve_benjamins 12y ago

Videos like this should become standard for any major SV acquisition!

imjk 12y ago
For a long time, people carrying Macbooks were seen in the same light as those that are seen wearing Beats headphones: suckers who bought over-priced (ostensibly premium) commoditized hardware with superior marketing. Perhaps these companies aren't so different.

pbhjpbhj 12y ago

When I see someone wearing Beats I think "there's someone who overpaid" - those are the people Apple want to continue attracting, I guess that's behind this? But the price, seems steep.

stackcollision 12y ago
You don't need to be overpaid to buy expensive image-"enhancing" crap, you just need to be very stupid about managing your money. I see plenty of people on the subway wearing Beats who don't look like they could buy their next meal. I'm sure there is at least one person in the world who has spent money from their third mortgage on those things.

loso 12y ago

Really weird to see the intersection of hip hop and tech on HN so much this week. I love it. I understand why Beats are popular. They sound great with bass driven music. Its like when people put Bazooka sub woofers in their cars in the 90s. Yeah audiophiles and older people hated them but they sounded great with bass driven hip hop. I still haven't figured out Apples play here. I'm starting to think its a best of both worlds with the earphone tech and the subscription services. I think they wanted them both equally hence the huge number.

kitsune_ 12y ago

This is boggling my mind, it surely can't be about quality. I bet Apple could have bought AKG, Audio Technica or Beyerdynamic for less than 3.2 Billions.

onedev 12y ago
Which one of those companies commands 59% of the headphone market over $99, did $1 Billion in revenue last year, and has sky-high margins and gets mass market consumers to pay top dollar for headphones? Exactly.
- johnward 12y ago
  it's about the brand and the beats brand is strong.
Anechoic 12y ago
They don't even need to buy one of those firms, they have some pretty sharp audio/acoustics guys working for them (including THX founder Tomlinson Holman), they could easily design premium audio products in-house. It can't be about the headphones.

imjk 12y ago

I can't believe no one has yet mentioned that Samsung just last week announced that they were entering the "Premium Mobile Audio Products" market. This likely has nothing to do with Beats' crappy streaming music software, and more to do with holding market share in Apple's main niche: fashionable hardware.

iambateman 12y ago

Beats headphones are crap, sure. And their streaming service isn't as mature as Spotify. But three billion dollars isn't about headphones or online music streaming or Dr Dre's drunken celebration. It's about growth. Apple has a chokehold on the iPod market. They've rocked the market with the iPod, iPhone, iPad and those products will be cash cows for a long time. But where is their next growth going to come from? A watch? I doubt it. All the granola 16-year-old white girls already have their iPhone. There's no room for crazy growth among middle class white people. Apple needs to use it's expertise to pursue new markets, which is exactly what they're doing. Tim Cook isn't afraid, he's strategic. Beats by Dre is a high-end consumer lifestyle brand that GREATLY appeals to black, hispanic, urban-context, young men and women. They sell expensive products. They care about design. They represent a way of living. They're Apple in another market. Beats is about to be Apple's international foray into a completely new growth segment. And it's genius.