Thoughts on Apple’s possible acquisition of Beats

The Internet turned itself inside out last night with reports that Apple was in talks to purchase Beats Electronics for $3.2 billion. It’s an interesting rumor, to be sure, but it has also baffled everyone.

Why would Apple need a headphone-maker? This is a great question, especially if you consider that many people don’t seem to like the quality of the headphones. Perhaps we’re not looking deep enough.

In my experience, acquisitions occur for a number of reasons:

  1. The product: The acquiring company feels strongly that they can’t compete with the other product, so they purchase the company. They could also be expanding their current product line-up and an acquisition is easier than building from scratch. I doubt that Apple is interested in Beats headphones, but Beats does have a music service that is supposedly very good.

  2. The people: This is an important one—sometimes more important than the product. Every once in a while, a company assembled an incredibly talented team of people that a company wants to work on its own products. In the case of Apple buying Beats, I’d say the talent acquisition is Jimmy Iovine—he’s a powerhouse in the music industry.

  3. The technology: This is another important one. Apple, and other companies, often buy companies with the sole purpose of integrating the acquired technology into its own. Apple has done this on many occasions over the past few years.

  4. The brand: Sometimes brands can complement each other in a particular market. I think this matters most when considering the younger age groups. This is where the headphones could make sense.

Most people seem to be focused on Beats as a headphone-maker that Apple is buying, but there is more to the acquisition than hardware.