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Apple's Beats buy signals bolstered wearables push

Posted: 14 May 2014  Print Version  Bookmark and Share

Keywords:Apple  Beats  wearables  headphone 

Apple's alleged $3.2 billion acquisition of Beats Electronics has sparked a bigger debate about the impetus behind such a move. The sum has also been taken up in several discussions, whether the smartphone giant may be paying too much. Then again, the headphone and streaming business is not too small either.

Apple is not just buying a headphone business but a streaming business as well, which makes sense for an investment, Analysys Mason Consumer Services Head Martin Scott commented.

Scott added: We're talking about a strong higher-end headphone manufacturer – industry estimates tend to put their 2013 sales at $1.5 billion. Beyond that, however, Apple is also buying a strong brand and an interesting burgeoning online streaming music business. Beats Music is well integrated with AT&T handset plans, and its 'curatorial' approach to music recommendation (getting musicians and celebrities to recommend tracks and playlists, not just an engine) should have good synergies with the Apple brand.

Scott also alluded to a second aspect: Apple is likely to do a lot more with headsets, and wearables, possibly around health. In February 2014, Apple was successfully awarded a patent for a health-monitoring earphone system. These earbuds would monitor temperature, heart rate, perspiration and potentially act as a controller, as well as delivering audio.

Beats earphone

The next pair of earphones from Apple could be a Beats device that monitors temperature, heart rate, and perspiration.

Apple's potential purchase of Beats Electronics would help the company increase its footprint in two hot consumer markets centred around the smartphone—streaming music and wearable devices. If Apple could gain a strong foothold in both these markets they would drive more people to the iOS platform and widen the moat on an already powerful ecosystem.

The wearable devices market opens up the next frontier in innovation for the mobile and communications market. IoT and LTE will also play a large role in taking the wearable devices market mainstream by providing connectivity that is fast and responsive enough to make use of such devices and apps practical.


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