Much has been made of Apple’s $3 billion decision to buy Beats, and whether it displays savvy and foresight, or something closer to desperation. Some say Apple is smart to be using its vast resources to infuse the company with fresh talent and a renewed sense of “cool.” Others wonder if Apple hasn’t gone off the deep end.
Techonomy’s David Kirkpatrick appeared on Bloomberg Surveillance Thursday to talk about Apple’s acquisition, calling it a “smart move” that puts the company in position to broaden its market share. In buying Beats, Kirkpatrick said, Apple will increase its appeal among young people—by way of both Beats’ iconic headphones and the “good intellectual DNA” of its co-founders Dr. Dre and Jimmy Iovine. “[Iovine] has an incredible sense of what people want. I don’t think he’s a Steve Jobs, but I think from an intuition point of view he is somebody who gets how people think and he can make classic products,” said Kirkpatrick, who is also a Bloomberg contributing editor. “Somebody like that could really add a lot to the culture of Apple.”
Apple’s acquisition will also help the company move into music streaming—though many critics question whether Apple is crazy to be spending so much on a streaming service with, well, so little. In March, Beats’ paying subscribers numbered 110,000—little more than 1 percent of Spotify’s whopping 10 million. Kirkpatrick, for one, isn’t worried about Apple’s finances. “It’s chump change for them,” he said.