[iambateman]

Beats headphones are crap, sure. And their streaming service isn't as mature as Spotify. But three billion dollars isn't about headphones or online music streaming or Dr Dre's drunken celebration. It's about growth.

Apple has a chokehold on the iPod market. They've rocked the market with the iPod, iPhone, iPad and those products will be cash cows for a long time. But where is their next growth going to come from? A watch? I doubt it.

All the granola 16-year-old white girls already have their iPhone. There's no room for crazy growth among middle class white people. Apple needs to use it's expertise to pursue new markets, which is exactly what they're doing.

Tim Cook isn't afraid, he's strategic. Beats by Dre is a high-end consumer lifestyle brand that GREATLY appeals to black, hispanic, urban-context, young men and women. They sell expensive products. They care about design. They represent a way of living. They're Apple in another market.

Beats is about to be Apple's international foray into a completely new growth segment. And it's genius.

[johnward]

I agree. Not to mention that Dre and Jimmy are pretty damn savvy businessmen. They basically beat monster at their own game: http://gizmodo.com/5981823/beat-by-dre-the-inside-story-of-h...

[abvdasker]

Any sources to back up your claim that Beats has a stronger presence among the "black, hispanic, urban-context, young men and women" dempgraphic? I'd believe it, but I'd rather not take that at face value given the entire point your making rests on that statistic.

[return0]

I don't even know beats, and the way you describe them, they sound pretty mediocre. Just because the amount of money being gambled is huge, that doesn't make it genius. Apple must know something about beats that nobody else does, otherwise there is no way it's genius.

[001sky]

Plenty of "mediocre" brands are great businesses. The thesis is that Beats has marketing expertise--can sell cheap things for high prices--in a market where apple lacks it.

Apple must know something about beats that nobody else does, otherwise there is no way it's genius.

Again, this is false. Its not about "know something" its about "do something". A market-expansion play into high-growth (new) demographic is all about leveraging the existing asset base @ apple. It's not about "knowledge", its about "leverage"...and the only people who can leverage apple's existing products and asset base are...apple.

The counter-argument to targeting the "urban market" if you believe (potentialy race-tinged) NY/london advertsining and marketing professionals....is lack of buying power in this "non abc1" demographic.

But Beats has succeeded--seeling expensive price-point goods (ie, apple's specialty) into this market. That is a HUGE mark of success for beats...the fact that they are selling "junk" at high-mark-ups just underscores their marketing genius.

TLDR (1) apple is buying the marketing genius; (2) that genius already selling at Apple-esque price points; and(3) into a growth-demographic where apple lacks strong histrical expertise.

[return0]

I do not consider myself an apple fan, but i also don't feel my iphone is 'mediocre'. You certainly pay a premium, but it's not like you're paying overpriced fabrics made in bangladesh. I 'm not sure how big a deal beats is outside the US, as well. I also don't agree that 1) they needed to buy any marketing genius (Apple is a marketing genius itself) 2) they are looking to sell overpriced products or 3) that they want to expand in demographics that can't afford to pay for the premiums

[001sky]

Not sure about any of these points being very robust. (3) is simply false, at 200-400 price points you are <already> selling at "premium pricepoints"...thus quality at a profit, is no problem; and wrt (2) since (3), no need to assume (2); and with respect to (1), Beats by DR DRE has street cred in urban markets (people using monthly/android phones) that apple lacks (white suburban rich etc)...if apple can "leverage it more profitably" by simply increasing underlying quality...the make/buy decision does not seem overly complex here.

[johnward]

You can't go anywhere in the US and not see someone on the street wearing beats headphones. It's a huge brand. Plsu they also have a streaming service that Apple could use.

[pook1e]

> They sell expensive products. They care about design. They represent a way of living. They're Apple in another market.

Except they don't care about quality, which is one of Apple's strongest selling points.

[InclinedPlane]

Perception of quality is one of Apple's strongest selling points.

[unfunco]

Without sounding rude, what's the actual difference? Or for that matter, how do we define quality? If you're talking about planned obsolescence then Apple could be excused for being in the technology market; which changes rapidly.

I use Apple products (except for a phone, which is a Nexus 4) and I nearly always feel that their products are of a higher quality, this might be because of materials (rarely plastic) or it might be because their UI seems much more refined than other offerings, I always feel with Apple that they have obsessed over the details. If quality is perceived (perception, past-tense) – is it not quality? Or am I missing something? Quality can come from an assembly line too.

[InclinedPlane]

Some measures of quality are objective. In headphones, for example, one can measure the degree of distortion of the headphones in reproducing sounds. In smartphones one can measure the quality of the camera, the screen, the durability of the device, and so on.

Many of Apple's products do represent quality construction, but they extract a premium beyond even that and they often put out products which are objectively no better than the competition but which the public nevertheless swoons over and eagerly buys at a premium.

Indeed, the excess perception of quality in Apple products is such a well known phenomenon that it has a name: the Apple Reality Distortion Field. I've seen many comments in this thread alone demonstrating the truthfulness of that phenomenon.

[adamlett]

> Some measures of quality are objective.

Almost by definition, anything that is "measure" of something, is objective. But just because something can be measured, doesn't mean that it is important. It's a well described phenomenon that we tend to focus on only that which can reliably be measured, and tend to ignore that which cannot. At what point does sound quality become "good enough" that it takes a backseat to other parameters of quality? I've personally long maintained that in some important respects, the standard iPhone headphones are better than more expensive, objectively better sounding headphones that I've also used, simply because they get small, seemingly insignificant details right, like where on the chord is the microphone placed, and how long is the chord, and how do they feel in my ear. I'm constantly surprised at how little consideration is usually given to details line these in even very high end headphones.

The point I am trying to make is this: Subjective perception of quality is far more important than objective measures of quality. The best product is the one that does the job well enough and is the most delightful to use.

[wmeredith]

Perception is reality.

[InclinedPlane]

That's delusional.

[sharkweek]

I was given a pair of Beats Studios almost two years ago, so maybe that makes it easier to say this but, speaking as a non-audiophile, they're... good? I read a lot about how terrible they are, but in my experience, they're comfortable, their noise cancellation is great at work, and I have never noticed degraded audio quality (once again, as a non-audiophile).

Could someone point me to a defacto better pair of headphones in the same price range as the studios ($200)? I'll give them a shot; I have no problem admitting that I might very well be missing something when listening to music.

[silverbax88]

It's like this: Beats headphones are worth about $50, at the most. Noise-cancelling in an office, you barely need to pay anything, because "noise-cancellation" is achieved by the headphones picking up background noise with a small microphone and then playing a dampening noise in reaction to a sound wave. This is easy when the background noise is constant - that's why "white noise" in offices works so well. But if the noise is varied, it's impossible to predict how loud or soft the next sound wave is going to be, and headphones are always slightly behind in reaction, as it is. So that's why sometimes it seems like noise cancelling headphone work awesome, and other times the seem like any other pair of headphones.

So you're not paying for better noise cancelling when you pay more for headphones. You are paying for superior sound quality.

If you are going to drop $200 on a pair of 'good' headphones, even noise canceling, I'd suggest getting some Audio-Technica, which are superior to everything out there, even Bose. Most are less than $200.

My experience: I own a small broadcasting company.

[gdilla]

THough it's not about the headphones. It's about the style and brand. Everyone knows the iphone isn't the best bang for your buck feature wise in smartphones. Everyone knows Nest costs $60 to make on your own. But the point is, mass market needs stuff that looks good, performs well, and where design was matters (looks/functions well for most people).

[morbius]

The only thing Beats headphones have going for them is their looks (which IMO is average at best).

Headphones are appliances, not complex gadgetry. Beats are poorly designed and built appliances. Most that buy them don't know any better, and there are far more well-designed headphones on the market that have a discernibly better sound than do Beats. It doesn't perform well, and its design is average.

The Audio-Technica ATH-M50x isn't as sexy a headphone as a Beats Pro, but its sound more than makes up for the difference.

It's just simple economics as to why the other brand is more popular. Have you EVER seen an Audio-Technica ad?

[EpicEng]

The parent was responding to someone who was discussing the quality of the beats headphones. He wasn't touching on the strategic element of this acquisition.

[jrock08]

$70 less http://www.amazon.com/Audio-Technica-ATH-M50-Professional-Mo...

$65 less http://www.amazon.com/Sennheiser-380-Pro-Collapsible-Profess...

[pdubs]

Sony MDR-V6/MDR-7506 http://thewirecutter.com/reviews/the-best-150-over-ear-headp...

[epaladin]

Agreed. The MDR-7506 is a "studio standard" for reference/monitor headphones in pro audio and video. The frequency response is not "enhanced" at the low end like the Beats and many other modern headphones. I don't think the curve is really flat- they always sound a little bright to me (thought in that hear-more-detail sort of naturally pleasant way), but they're definitely more flat than the Beats. The 7506 is like $90. The V6 has the same drivers, but doesn't have a gold plated plug (seriously). I got my V6s refurbed for $50. The closed earpads passively block external sound pretty well, and they're relatively comfortable. They don't come in green or pink, but they sound good, are still made with some metal parts for durability, and they're way cheaper than Beats. Source: work in a couple different TV production studios, a friend that's in the audio/acoustics industry, and a lot of reviews at B & H.

[ArkyBeagle]

Those are great for tracking and/or studio-critical ( read: intense, "What was that??") listening but they're pretty shrill for general listening.

I find them fatiguing.

I cannot get past the Koss KTXPRO-1. They're very inexpensive, but I can mix on them, they're comfortable and priced very well. There's no fatigue with them.

I really do throw a rough up first on the 'phones because it seems to get me to a decent first mix fast.

I need to buy a nice pair of Grado and/or Stax just to try to wean myself off these things. :) Don't mean to sound fanboiish, but I've used 'em now for going on fifteen years. Headphones are like that.

[IBM]

You're not missing anything, don't worry. I was a former audiophile spending way too much money like everyone else at Head-fi.org

Then I realized the collective delusion everyone was living in when I forced myself to double-blind test headphones and various audio formats. Audiophiles are a tiny minority and you can find all of them poo-pooing this deal on Twitter (a lot of them overlap with Apple's customers), but regular people are just fine with Beats or Bose (another derided brand among audiophiles) products.

You can easily get sucked into that world and make yourself believe that those really expensive headphones are worth it, but it will be because you want to believe it after spending all that money.

[Akkuma]

I had the opportunity to test 4-5 headphones without paying a single penny. I also got to try out a pair that was a slightly better model than my old ones I had on hand and found the differences too minimal to think it was worth upgrading to. It was pretty obvious that there were differences between all the headphones. In other words, I disagree with the "You're not missing anything" statement.

I don't know what your definition of spending too much money is, but you can still appreciate good sounding headphones without going crazy and spending an insane amount or constantly getting different gear. I had my last set of headphones for at least 5 years or so until I blew the driver and all the bass was screwed up.

[moogleii]

I agree with some of your points (and have also forced friends to do double blind tests on their shiny new toys), but the problem is the price point. I'm not an audiophile either, but for $200, it better justify itself. To me, $200 is really expensive for headphones. And from the zillions of comments and reviews I've seen, you can get the same quality from a competitor for $50. It's borderline a Monster Cable scenario.

[warfangle]

Beyerdynamic DT660: http://www.amazon.com/beyerdynamic-DT-660-Premium-Headphones... (go for the 770 if you're in a quieter situation, as they're open-backed and you get a bit of a cleaner sound)

Grado is almost always a stellar choice. http://www.amazon.com/Grado-Prestige-Series-SR125i-Headphone...

Both cheaper than beats.

Both much, much better.

[stephencanon]

Grados are superb but nearly totally unsuitable for office use, as they're open. (Grandparent mentioned using his cans at work).

[ProAm]

They aren't bad headphones, the thing is you can get equivalent quality spending ~$50-70.

[dopamean]

> you can get equivalent quality spending ~$50-70

That's what he was asking for. I've frequently heard this and I believe it to be true but as a non-audiophile how do I identify a pair of $70 headphones that are as good as Beats' $200 ones.

[falcolas]

You listen to them. Listen to a piece of music that you know well, and listen to the two side by side. Ideally something which isn't all in one frequency range.

With better headphones, you will hear more detail in the sound. Words which sounded mushed together in the Beats will be distinct in better headphones. The mids and highs will come through much more clearly. Music will just sound better.

Beats have decent bass, but they're hardly the only ones with good bass out there, and many which have good bass are also capable of sounding better in the rest of the frequencies as well.

[superuser2]

This is an easy thing to say, but stores with a reasonable selection of headphones you can listen to are rare. The best option for your taste/budget at the Best Buy display, for example, are rarely the best choice for the money.

Many of the beast headphones aren't consumer products and aren't sold in mainstream retail outlets. I love my Sennheiser HD380s but I know about them because I'm an amateur engineer and they're great for live monitoring.

Really, just look at Sennheiser, AT, Shure, Koss, Grado, Beyerdynamic, ... Anything mainstream that's not Beats or Bose is probably worth looking into.

[ProAm]

There are several good posts on Hacker News and other sites that will frequently reference good headphones for the cost. I cannot find the exact one that I used (because after I got my headphones I forgot the information and probably wont need it for another 4+ years). But check these out and they might help [1][2]

[1] https://news.ycombinator.com/item?id=7685327 [2] https://news.ycombinator.com/item?id=7658103

[superuser2]

Look at Audio-Technica, Sennheiser, and/or Koss. All make headphones in both price ranges which are (more or less) worth what they cost.

[Akkuma]

If you don't mind spending a bit more I've had one of the older versions of this: https://mrspeakers.com/product/mad-dog-leather-alpha-pads-co...

I had Sennheiser HD595 prior and these are even more amazing. I've listened to a pair of Beats and they pretty much were only bass drowning out everything else. You can also check out www.innerfidelity.com as they have reviews that are not only subjective, but objective.

[yareally]

http://www.amazon.com/Sennheiser-HD-280-Pro-Headphones/dp/B0...

Currently $86.00

Had these for about a year and love them. Noise cancellation is good enough that I end up getting startled by people walking up behind me that have to tap me on the shoulder to get my attention (that could be good or bad depending on your preference).

[stevelosh]

Marshall Monitors: http://www.marshallheadphones.com/headphones/monitor/monitor...

[iambateman]

From a durability perspective, I've had my $50 Sony headphones for 3 years while my friend had $200 Beats for 6 months before the whole unit disintegrated.

[baddox]

That's not very useful data, especially without knowing how you both treated your headphones.

[InclinedPlane]

I'd hardly describe it as genius. Apple saw an opportunity: a headphone maker with such a strong brand they can demand a 100-200% markup on their products and still maintain strong sales. Apple is also in exactly that same market, deciding to pickup Beats isn't genius it's obvious.

[adamlett]

Obvious? Maybe if the didn't have to pay anything for the company, it would be. But why is it obvious that this acquisition makes sense at that particular price? I'm not saying that it doesn't make sense, only that you have to at the very least consider how much the company is worth to Apple, before you declare it a no-brainer acquisition. Would it still make sense at $4B? $6B? How much would be too much before this is “obviously” a bad deal?

[InclinedPlane]

Beats has a marketshare of something like 2/3 to 3/4 for headphones over $100 and annual revenue of about $1.4 billion in 2013 (1/6 of Facebook's revenue). If anything, $3.2 billion was a steal.

[epo]

Citation required for such a handwavy assertion. Beats is a fashion brand and those are notoriously ephemeral. If Beats want to sell they may know the game is up, but then so would Apple.

[001sky]

Citation required for such a handwavy assertion

Fashion brands M&A all the time> https://en.wikipedia.org/wiki/LVMH > LVMH is a classic, diversified example.

Even apple is seen by many as a 'fashion accessory'> https://en.wikipedia.org/wiki/IPod_advertising#Silhouette_St...

They ran an entire marketing campaign based on the gratuitious display of earphone cords !!

[adamlett]

You mention marketshare, but neglect to mention the size of the market. You mention revenue, but neglect to mention profits. For all your numbers tell me, Beats could be operating at a loss in a shrinking market.

And I'm curious: If $3.2B was a steal, what would have been a fair price?

[nsxwolf]

To be fair, I didn't see you or anyone else predicting a Beats acquisition by Apple. So how obvious is it really?

[InclinedPlane]

So you're saying that acquiring an incredibly well-known high-margin manufacturer in the same market is in some way a completely surprising and non-intuitive decision?

[nsxwolf]

No, not at all - but I don't think that is the same thing as "obvious" the way that word is usually used.

[GBond]

So you are arguing that this is larger hardware growth play here... and it is all about race?

[glomph]

Every big sale there are always loads of people who say it is genius and loads who say it is stupid. Usually the answer is that it it is pretty boring.

[ChrisArchitect]

amazing summary that I've not yet seen today nailing it so concisely. +1

[ithought]

It's interesting that Dre didn't create his music (*sampled), didn't write his lyrics and didn't come up with the idea for the headphones yet is celebrated as a genius. It was Monster's idea and then Jimmy Iovine propelled it to where it went.

Dre is a quiet, private person, who rarely tours or produces new music. The idea that he is a billionaire now from putting his name on exorbitantly expensive headphones and marketing them to people who can't really afford them, seems wrong.

[aneisf]

>Dre didn't create his music (*sampled)

This is a highly ignorant statement.

Sampling recorded music is in fact a very musical process, from the first 20th-century musique concrete experiments to the more modern intricate, multilayered compositions of artists like The Beastie Boys, DJ Shadow, Public Enemy, etc.

Musicians always take inspiration from other music. Build a song around a chunky 'AC/DC-style' riff. Channel Quincy Jones in the drum sound. Sampling was very important in the democratization of music production because it allowed artists without access to a studio and a host of instruments to work from a baseline of recorded sound. It quickly developed into an artform unto itself.

Yes, there was and still is a contingent of artists who sample lazily and with disregard for the original music, but Dr. Dre's productions--especially his early stuff--are full of musical reverence, high-quality engineering, and even improvements over the source material. Not to mention that after the NWA days he was increasingly bringing in session musicians to replay and reinterpret source material rather than actually sampling it digitally.

edit - And to expand a bit more on the last sentence, that is exactly what music producers do. It's only in recent years that the end-to-end musician, producer, recording engineer, mixing engineer, and mastering engineer has come into fruition. And that democratization of the recording process largely stems from technological advances like digital sampling.

[ithought]

You're right and my comment was off-base. I was just annoyed by the video release of Dre bragging about being a billionaire. Also it's somewhat interesting that he sued Napster and intended to sue college students and universities then becomes immensely successful via the digital music market.

Regardless, I let my personal bias influence an asinine comment. I'm aware that sampling music is artistic endeavor and takes talent and hard work.

[sbilstein]

Sampling is an art in it's own right.

Dre is a very talented producer with a long history of success: producing tons of music, bringing gangsta rap to the mainstream, pioneering the gfunk sound, pioneering the business model which have made hip hop labels so damn profitable, assembling super groups of studio musicians to consistently produce very popular music, finding and marketing brand new artists that have skyrocketed on the charts over and over again (eminem?), and more. Dre is an artist, but he's way more than that.

read something: http://en.wikipedia.org/wiki/Dr_dre

[epo]

Cue all the people irately claiming that sampling is artistic.

Anyway, somehow who gets to be a billionaire just "by putting his name" on consumer items has got something going for him, even if it just luck.

[hackaflocka]

Monster had the idea to do headphones. But Iovine and Dre came to them with their idea to do electronics. Monster didn't go to them, they came to Monster.