A New Beat At Apple

So it's finally official, Apple has bought Beats.

Like most of the so-called Digerati, the early rumors came as a surprise to me, I didn’t think it was a good fit. I still don’t.

Tim Cook's comments today confirm that the deal was mainly about the Beats Music Subscription service. They decided it was better to buy than to build:

“Could Eddy’s team have built a subscription service? Of course,” he said. “We could’ve built those 27 other things ourselves, too. You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.”

It's clearly not the technology that's valuable to Apple. A subscription service isn't all that different technically from iTunes Radio.

What they desperately needed from Beats is the marketing and industry relationships. In the grand scheme of things for Apple, $3B is a bargain for that.

However, this deal has made me much for bearish on AAPL. It's not that it's a bad deal. It's what the deal means.

It means that Apple doesn't believe their own brand can compete with the best anymore in music.

It means they don't have the clout and connections they once had with the Music industry.

It also means they aren't willing or able to invest more of their own talent in that area.

Most telling is this quote from Tim Cook:

“They’re going to be coming up with ways of features that blow your mind,” he said, “and products you haven’t thought of yet, and seeing around the next corner to articulate the way to take music to an even higher level than it is now.”

“They're" going to be innovating, not us.

To me, this indicates a broader shift at Apple. One possibility is that the Music Period has served its purpose, and they are shifting their core focus eslsewhere. Perhaps they see a future where Apple is diversified enough that each industry vertical requires its own identity.

Perhaps they will reveal more next Monday. Let's see.

Related: Tech, Business.