There have been mixed reactions from analysts over Apple's $3 billion acquisition of Beats Electronics. However, Dr. Dre's involvement in the deal and subsequent integration into Apple might prove to be the best thing about the deal for Apple.
Wells Fargo analyst Maynard Um and Piper Jaffray analyst Gene Munster, both see the acquisition as a deal that's not so good for Apple. Um said that the deal was a "defensive move" by Apple, when he thinks that Apple should be purchasing "offensive assets" to gain better position for itself. Munster described the deal as a "bad idea" when the first rumors of the acquisition began circulating last month.
Both Um and Munster, however, did not mention what Dr. Dre, whose real name is Andre Young, would bring to Apple with the acquisition. Both analysts only mentioned Jimmy Iovine, Dr. Dre's co-founder for Beats and a music industry insider. Um said that Iovine will bring with him contacts in the music industry to Apple, while Munster said that perhaps the acquisition was Apple's way of hiring Iovine to become the leader of the company's content strategy.
When Iovine and Dr. Dre were discussing the acquisition deal with Apple, it was reported that it was Iovine that was in the forefront. However, Dr. Dre has remained as a steady presence in the background, highly involved in the development and protection of the Beats brand.
Dr. Dre has drawn comparisons to the late Steve Jobs as well. It is reported that Dr. Dre prefers to follow his gut instinct over market research, which is similar to the approach of Jobs. Jobs likewise didn't believe in market research, saying that consumers have no clue as to what they want until somebody else shows it to them. Dr. Dre is also a workaholic perfectionist, involving himself not just in the development of Beats' high-end headphones but also in things such as TV advertisements and Beats Music descriptions.
As a colleague says, Dr. Dre is seen as the "cultural barometer" of what's cool for Beats. This is something that Apple has admitted in recent years that the company has been lacking. Philip Schiller, Apple senior vice president of worldwide marketing, said in e-mails that Apple had growing concerns that it was losing its "cool" factor to Samsung.
Samsung is "in a zone while we struggle to make a compelling brief...Something drastic has to change," said [registration required] Schiller to an executive from Media Arts Lab, which has led marketing efforts for Apple for many years. Schiller also noted an article that showed the success of "The Next Big Thing" campaign by Samsung, which portrayed Apple users as older and disconnected with the latest technologies while Samsung users were shown as young and hip.
"We have a lot of work to do to turn this around," said Schiller.
Dr. Dre just might be what Apple needs to turn around their image against Samsung. Dr. Dre, along with Iovine, will not have traditional job titles at Apple and will be known simply as "Jimmy and Dre." Tim Cook, Apple's CEO, said that Dr. Dre will be working with the hardware and music divisions of Apple, as the company tries to put a firmer stamp on the music industry.
