Breakout

Beats deal shows Apple has finally woken up to reality

Apple is just a consumer electronics company and has been so for quite a while now.

Its days as a magical company are long over. The magic died two and a half years ago with Steve Jobs and now Apple is finally coming out of denial, acknowledging reality and giving itself the opportunity to move on to its next phase.

This is long overdue.

The height of the denial culminated some months ago in the over-the-top fantastical and widely distributed iPad commercial complete with dreamy Robin Williams voice over that, while excruciatingly beautiful, seemed way out of touch with reality and the accelerating trend towards the commoditization of the tablet market.

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So Apple, if the reports that it is close to buying Beats Electronics prove true, is finally pivoting; a long overdue move out of this denial and a coming to terms with what it is.

Parallel to this magical denial fantasy, Apple’s rigid stance, that it must build everything in house, even as it was generating the massive financial resources necessary to make strategic purchases, froze progress and hurt the company badly. Apple flat out missed Nest, a company recently acquired by Google, built by ex-Apple guys, that makes connected thermostats, fire detectors and the like - beautifully designed products that are a part of the internet of things and forward looking.

Now Apple must play catch up and, despite its product flaws, Beats is a great choice. It has phenomenal brand recognition that the kids love. Dr. Dre and Jimmy Iovine are the tastemakers. This is why people spend so much on these products.

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Criticism of the Beat headphone quality might even be warranted, but fixing product flaws is simply much easier than creating a wholly new and adored brand.

Plus, Beats boasts a complementary product set to Apple’s and will fit right into Apple stores. In fact, Apple stores already sell these products and so Apple has better first hand clarity as to how much the headphones are craved.

Now Apple must integrate the company while allowing it to maintain its identity and without destroying its cachet.

Its also being reported by the NY Post that Apple is in talks to have Beats Electronics head Jimmy Iovine join as an advisor. This too is critical as Apple moved further out of touch with consumers during its denial, astonishingly missing the larger phone screen trend.

Having broken the ice, Apple now must embrace its newly discovered and more realistic identity as a higher end consumer electronics company and continue to move aggressively to extend complementary offerings.

It has the absurd piles of cash to do it, spending a mere 2% of its hoard to purchase Beats. So spend more, Tim Cook, and feast on great brands with complementary hardware. Sonos would probably make a great next move.

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