Quick. If Apple were a shoe company, what brand would they be?
If you’re being honest- you didn’t say Nike.
Maybe K-Swiss.
Beats is much closer to Nike territory. And if you spend any time around fashion conscious teenagers today, you know that Nike is the brand to beat. K-Swiss is for the prep school set, an edgeless, conforming statement of minimalism. So if you’re K-Swiss and you want to court the athletic swagger that Nike commands, what do you do?
Assuming you have the money, you buy the bridge instead of building it.
Building a product line and authentic brand that’s trusted for what it says it is can’t be accomplished quickly or predictably.
What Apple has done so well with design and business development historically is to is zig when everyone else zags. Making moves in the opposite direction has served them well in the past and buying a seemingly low on technology high on style brand like Beats is exactly a move in the opposite direction. Facebook betting on Occulus or Google snapping up Nest might move the tech chatter needle a hell of a lot, but teenagers don’t care at all. Apple is buying a bridge to a market that they have had a harder time holding onto as competitors like HTC and Samsung invest more deeply in design. Slick, sleek, minimal is becoming the status quo, and forward looking companies are trying to connect with a more vibrant, variable aesthetic (Project Ara, anyone?). Beats has been walking this path for awhile now.
With estimates putting Apple’s buying price at about 3X the revenue for Beats, it’s a pretty solid value play considering the rapid growth that Beats has enjoyed over the past years. I have no doubt that behind the scenes Apple is continuing to do what they do best, developing innovative, insightful technologies that leverage the power of great design. Staying focused on those lofty goals means knowing when to buy the bridge instead of building it.