Tuesday, June 10, 2014

Apple Acquires Beats Music, Plans On Continued Support And Development For Android And Windows Phone Devices

So some big news recently was the fact that Apple was acquiring Beats Music, which left many Android and Windows Phone users scared that Apple would have exclusive rights to anything and everything Beats related, leaving anyone else out in the cold. Well according to recent word from Apple, the Cupertino company plans to continue to offer Beats Music apps for both Android and Windows Phone after it finalizes the deal which also includes Beats Electronics.

Apple Executive Eddie Cue was at Code/Conference recently and was caught stating that the apps would continue to be developed and supported for devices other than Apple's. Code/Conference is a conference headed up by Re/Code, the website that was founded by the folks who previously hosted All Things Digital for the Wall Street Journal.

The Beats Music apps were recently updated on May 22 for the Windows Phone and on May 28 for Android. The updates for iOS and Android that followed the next day extended the previous 7-day free trial to 14 days and reduced the annual subscription fee from $119.99 to $99.99, a 17% reduction. Beats Music launched in the United States at the end of January and is a music streaming service similar to Spotify in that it offers users access to millions or songs and albums while also letting customers play an unlimited amount of music.

Cue, who is the head of Apple's Internet Software and Service group, will take up leadership for Beats Music. The two co-founders of Beats Electronics, renowned record executive and producer Jimmy Iovine and rapper/entrepreneur Dr. Dre, will join Apple as employees and report directly to Cue.  The deal itself, which totals $3 billion, should close later this year, according to Apple, and is said to be primarily cash with some stock to invest over time.

Beats Music attempts to differentiate itself from rival offerings like Spotify and Rhapsody, among others, with its music curation. Apple CEO Tim Cook, who did multiple interviews with different publications, cited the curation of Beats Music as a reason why Apple wanted the service in the first place. According to Cook, "We've got a streaming service that we believe is the first to get it right. They had the insight that human curation was very important. We think they've done an A+ job."

The most interesting thing about this whole deal is the fact that Apple has decided to continue supporting Android and Windows Phone, which goes against the entire business model of the company. Traditionally when Apple acquires the rights to cross-platform technologies it closes support to anything that isn't Apple. The main beef of Apple's revenue comes from hardware sales with the main focus of the company being the sale of more iPhones, iPads and Mac computers.

However, Beats Music is still young. At Code/Conference Iovine stated that the service has 250,000 paying subscribers, which is less than 3% of Spotify's 10 million. If Apple wants Beats to grow its paying accounts then that means support for the service on devices outside of Apple, like Android and Windows Phone, is necessary, especially when you realize that Android is the dominant mobile operating system in the world. According to Ben Bajarin, an analyst at Creative Strategies, this is as much an opportunity for Apple as it is a reversal of past practice.

According to Bajarin, "What makes this interesting is, for Android in particular, that service could serve as the first experience with an Apple product for hundreds of millions and soon to be billions of potential customers. I would argue that Apple paves the way for their future success in iPhone and iPad by bringing iTunes to Windows. It helped get iPods in the hands of millions of people who never owned an Apple product. Much great research exists that point out that once a customer tries one of your products they strongly consider more in the future."

Apple is undoubtedly hoping that the success of iTunes on Windows resonates the same way with Beats Music on Android and Windows Phone. And who knows, maybe this will be the first seed planted into something that grows into an Apple/Android/Windows Phone merger that completely takes over the world! (But let's hope not because world domination never works out).

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