In an article for The New Yorker’s blog titled “What Does Apple Want with Beats by Dre?”, Yukari Iwatani Kane writes:
In the nineties, Apple was falling apart. Steve Jobs was gone, and the company seemed distracted. Instead of focussing on computers and operating systems, Apple branched out. It built new printers and a camera, called the QuickTake, that couldn’t zoom or focus. This seemed like an attempt to disguise the lack of innovation in its main business. In fact, the new products only added clutter and chaos.
After Apple acquired Jobs’s company NeXT, at the end of 1996, Jobs and his hardware chief, Jon Rubinstein, worked rapidly to restore order. One of their first moves was to kill the division that had built the printers and cameras.
And then later writes:
There’s another, more mundane reason why Apple could be interested in Beats—one that hasn’t gotten as much attention. Maybe Apple simply has cash to burn and wants to spend some of it to acquire a steady, reliable stream of revenue and profits from an expanded line of accessories. If Apple’s experience in the nineties is any indication, this would be worrisome.
Maybe the reason this theory hasn’t gotten much attention is because it doesn’t make any sense. Earlier in the article, Kane writes, “estimates put annual [Beats] revenues at just over a billion dollars—about what Apple makes in two days.” If Beats makes in a year what Apple makes in two days, why would Apple purchase Beats “to acquire a steady, reliable stream of revenue and profits”? The article is internally incoherent.
The real purpose of the piece is to draw a line from the Apple of 1996 to the Apple of 2014. The problem is that they are different in so many ways that they may as well be different companies. Why people who are skeptical of Apple’s future without Steve Jobs assume the only path for Apple is to completely fall apart continues to mystify me. There are plenty of other ways for the company to lose its leadership position, if that is to be its fate.
To understand this, remember that when Jobs left Apple the first time, he was thrown out. Implicit in that is a rejection of his leadersihp, his strategic vision, and his product priorities. John Sculley then had to make Apple his own, to justify his ouster of Jobs by guiding it according to his own, necessarily distinct vision.
Apple today is clearly operating in the spirit Jobs defined. The executives embrace Jobs’s ideas and strategic vision; they obviously don’t reject it. Apple even has an internal university where they teach employees the lessons from the major decisions made during Jobs’s second tenure (and presumably after, though enough time might not have passed yet).
This difference, of an Apple rejecting Jobs versus an Apple embracing Jobs, makes comparisons between the first and second post-Jobs eras at Apples meaningless.
One of Jobs’s key principles was focus. Tim Cook reiterates that at every opportunity. Apple is not buying Beats to lose focus by diversifying into headphones. Something else is going on. To me the most likely answer is related to music content, probably music streaming, but it’s really hard to know.
The lack of an obvious reason for such a large acquisition does raise questions, but the ones Kane asks are all the wrong ones.