Apple's $3bn deal for Beats: it's all about the people

Burberry's Angela Ahrendts, Yves Saint Laurent's Paul Deneve and now Jimmy Iovine and Dr Dre - Apple is using its billions to poach people who know how to sell brands.

by Rachel Savage
Last Updated: 28 Aug 2015

When rumours Apple was buying music streamer and headphones maker Beats first surfaced, tech-watchers were universally perplexed. Why would the tech giant, renowned for developing its own products and only snapping up companies that can add to those, splash out a reported $3.2bn (£1.9bn) for poor quality headphones and a mere 200,000 streaming subscribers?
 
A probable answer, MT speculated, was getting hold of Jimmy Iovine and Dr Dre – the people who figured out how to shift millions of aforementioned below-par-yet-pricey ($300+) headphones, and it looks like Apple chief exec Tim Cook agrees (although the late, revered company founder Steve Jobs, who explicitly eschewed big money M&A, probably would not).
 
‘These guys are really unique,’ Cook told the New York Times. ‘It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find.’
 
‘Could Eddy’s team have built a subscription service? Of course,’ he continued (referring to Eddy Cue, Apple’s senior vice president responsible for iTunes, the App Store and its cloud services).‘[But] you don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.’
 
That rationale for the $3bn deal fits with the company’s recent people-poaching: nicking Burberry chief exec Angela Ahrendts to head up its stores (bricks and mortar and online) and Yves Saint Laurent boss Paul Deneve to work on ‘special projects’ (rumoured to be an iWatch), reporting directly to Cook. In short, Apple seems to be snaffling up marketers who know how to sell big-money brands.
 
Bringing on board people who know how to monetise ‘cool’ won’t necessarily comfort Apple’s investors and die-hard devotees though, given that the company was built on innovative new products and creating its own eminently desirable brand.

It will also need to learn to deal with Dr Dre, who hilariously broke corporate protocol on staying tight-lipped before deals are sealed by boasting about being the first hip-hop billionaire in this video. Or maybe trying to make itself look decidedly non-corporate was exactly Apple’s point.

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