Friday, May 9, 2014

Beats As Apple's Instagram

This might not be the best analogy but I'm beginning to see Beats as Apple's Instagram.  Bear with me and maybe I'll manage to muddle my way through this.  This is because I'm not entirely convinced about why Apple would want to buy Beats.  In fact, I'd bet come next week, there will be no announcement regarding Financial Time's breaking rumor about Apple plucking down $3.2 billion for Beats, maker of headsets and floundering streaming music service.

So, the only thing I can think of is that Apple is looking at Beats for the streaming music service to supplement its iTunes buy/download music store as interests in streaming music has increased while downloads have decreased in the last couple of years.  Most of Apple's iTunes service growth comes from app sales. 

And just like Facebook who spent $1 billion for Instagram (which as far as I know is still not making money), Apple is buying Beats to make sure it has a foot in the streaming music service.  Why not buy Spotify, you ask?  I'm sure Apple took a look at it and for its own reasons decided Beats makes more sense.  There have been speculation that Apple will keep around the team of music insiders that built Beats' music service. 

Like everyone else, I don't think Apple bought Beats for the headset hardware. 

And like Facebook, Apple probably will not fold Beats into Apple and rename it iTunes Music Streaming.  It makes sense for Apple to keep the appeal of Beats for other mobile platforms as well as the PC market. 

So, what do  you think?  Make sense?  It's not so much as a defense play but see the right opportunity to get into a new service with the right people. 

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