Beats is not about headphones or a cool service with licensing deals.
Beats is all about one-to-one connection of a brand and subscription
service that feeds a person's soul. Apple's acquisition of Beats
Electronics is more about the acquisition of a kindred spirit than a new
line of business. Sure, the executives from both companies walk
entirely differently, but their cores are similar.
I get the sense that a good many Apple enthusiasts are confused
by its acquisition of Beats Electronics. Sure, many are nodding their
heads, saying that Beats is good for Apple and makes total sense. The
headphones are selling well. With 250,000 paying subscribers, the Beats
Music service is taking off fast, and it can only be elevated by Apple's
global brand and infrastructure.
However, there's an undercurrent of concern, too -- a bit of head-scratching
and scrambling to make sense of what this really means for Apple's
future. After all, couldn't Apple have built everything that Beats
offers, all by itself? (On the surface, yes.)
Does Apple really need to buy "cool" these days? (No.) More worrisome,
is Apple becoming one of those big companies that starts buying other
companies just to keep the parent conglomerate growing and expanding
in order to confuse Wall Street and make lackluster executives feel
like they're actually doing something important? (I sure hope not.)
So why Beats? Why now? What the heck is going on here? Is Apple going
to start buying companies in order to attract new management talent,
like Jimmy Iovine and Dr. Dre? After all, it's hard to make a
traditional "hire" of an industry-leading professional with deep
industry business connections. A simple hire seems like a
step down, especially to pros who are running their own companies. A
big acquisition, though, makes landing an Iovine or Dre possible.
Despite making sense on paper, the whole Beats acquisition still seems
so anti-Apple that it's just damn unsettling.
Good but Not Insanely Great Products
At first, I got hung up on the headphones, because the Beats headphones
are popular -- but not
insanely great. Apple used to shoot for
both -- to make a product that was insanely great
and make it
popular through fantastic marketing. As near as I can tell,
audiophiles and music lovers who appreciate fidelity pretty much shrug
their shoulders at the Beats line of headphones and speakers. Why
would Apple buy something that wasn't better than what it could produce on
its own?
This is an issue I've been struggling with. Like most of the tech
press, I tried to shrug it off with the notion that the fledgling
Beats Music subscription business is the key. That Apple is willing to
buy the mediocre "products" in order to get the backend subscription
deals with music labels, so as to offer something it doesn't yet
have itself.
Forget the scraggly trees, right?
Just buy the whole damn forest.
However, Apple is a very thoughtful company. It moves with intent. If Apple
poured US$3 billion into its own subscription service, it easily could
launch a great new service, if not a whole new sub-brand. So what gives?
A Closer Look at Headphones
Despite popular belief, Apple is not a fashion company. Apple produces
products that become fashionable -- not because of how they look, but
because of how they make customers feel. When you hold an Apple device
in your hand -- iPod, iPhone, iPad, MacBook -- the quality and care is
obvious. Even the iPhone 5c is incredibly solid and well-made.
Combine
the hardware with the software, which delivers constant positive
interactions with the user, and you've got a device that becomes an
extension of a person's personality -- in a sense, an element of
fashion. Still, Apple didn't set out to be cool -- Apple set out to build
great products that, because of their greatness, became cool.
As a consequence, Apple became cool, too.
Beats seems to come from a radically different place -- it started with an attempt to
create a product that was cool and fashionable -- one that people
wanted because it was cool.
That seems anti-Apple.
There's something wrong with this simple explanation, though. It's not
deep enough. It's flat and condescending -- not only to Jimmy Iovine and
Dr. Dre, but also to the consumers who shelled out
for mediocre-plus headphones in cool shiny colors.
So what's going on? Music is about emotion. It creates and modifies
moods. It's profoundly biological. What Beats did was build and create
a new cue -- a sign of sorts -- in color, format, and logo -- that
reminds a person to listen to music and enjoy it, to put on their
Beats headphones with intent.
Then the visceral experience of the
music reinforces the distinctive design in such a way that users get
more joy out of listening to music through their Beats headphones than
through other, more generic-looking headphones. Cost and quality
become secondary to the repeated experience created by
using Beats headphones.
In short, Beats headphones represent a constant reminder to enjoy your music.
This achievement is a big deal. It's not a fad. It's a connection
between a product and life enjoyment -- and when the joy is absent, it's
a form of addictive self-medication.
I'm not kidding.
Most of us manipulate our energy and moods with a wide variety of
tactics and substances -- coffee, alcohol, chocolate, hot showers,
exercise, potato chips, drugs. Over the ear headphones (that
youngsters will wear in public) create a suddenly immersive music
experience. They shield you from the outside world and focus
attention on the experience between your ears -- in a way that Apple's
iconic white earbuds simply cannot replicate. Earbuds deliver sound,
but they don't have the size and shape to trigger a
deep physical and emotional signal that focuses your experience the
way that large headphones do.
The very act of placing a large set of headphones over your ears
creates a cocoon of sound and experience that both shields you from
the rigors of the outside world and takes you somewhere else.
Does Tim Cook know this? Maybe. Does Apple? Maybe. I wouldn't be
surprised. The most coveted products are always less about fashion
than they are about emotion -- the dirty little secret of addiction.
(After Flappy Bird -- which nobody accused of being cool -- you would
think the connection between product, experience, and addiction would
be more thoroughly discussed.)
Enter the Beats Subscription Service
Apple could seek to create its own line of headphones to
attempt to create this same sort of buying and using experience. But
Apple doesn't have the secret ingredient in high-grade musical
addiction anymore -- the connection of mood with device and content.
Beats connects the device (headphones) with the content through its
curated streaming music service. The customers trust their moment to
the Beats Music curated list. Then, each time a user creates an
awesome playlist by connecting current music needs to the
service itself -- and is rewarded with a blast of music-delivered
emotion -- a reinforced feedback loop is created. Talk about customer
loyalty. Talk about viral world-of-mouth marketing. Talk about shared
moments hanging out with friends.
Pre-built playlists in iTunes do not invite this sort of surprised
customer delight. Apples iTunes Genius just doesn't cut it. And iTunes
Radio? The feeling is more akin to tolerating the stream than being
connected to it.
Beats is not about headphones or a cool service with licensing deals.
Beats is all about one-to-one connection of a brand and subscription
service that feeds a person's soul -- and it does it with a profitable
product.
I've got to believe that Apple recognized something here that is
profoundly different than all the other companies that Apple could
have bought.
Like Nest, for example. Nest users appreciate their smart thermostats,
no doubt, but do they have a visceral addiction and appreciation for
the thermostat? I doubt it. Google buying Nest is a practical way to
build a home-based world of Internet-connected things. Facebook buying
Oculus VR or WhatsApp is more simply about a big brand expanding its
reach. Microsoft buying Nokia is a desperate attempt to wedge open the
mobile device door before it slams shut forever. All these
acquisitions are about acquiring very simple, tactical products.
Beats is not simple or particularly tactical.
What finally settles it for me is the realization that the acquisition
of Beats Electronics is more about the acquisition of a kindred spirit
than a new line of business. Sure, the executives from both companies
walk entirely differently, but their cores remain similar -- they
understand that customers are about experience, and companies that
feed a fantastic experience are those who win.
That's worth repeating: Companies that feed a fantastic experience are
those who win.
Because the collision of products and services with deep customer
experience is such a rare quality, I don't think similar acquisitions
are going to happen often at Apple. So yeah, the Beats acquisition is
a big deal. Letting the service work with Android and Windows
Phone customers is a big deal. But shifting tectonic plates in
Cupertino? Not so much after all.