[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.