Apple’s Death Spiral

Yesterday it was, kinda, announced that Apple are acquiring Beats for $3.2bn. Dr. Dre and Tyrese Gibson even posted a video of them bragging about the acquisition which was promptly pulled once it got the attention it was obviously going to get! (It seems they don’t know the etiquette of the acquisition process). Anyway, to me the acquisition signals the slow decay of Apple Inc as we know it.

Many people have written about what a smart acquisition it is because Beats is a solid business with a great brand that is at the higher end of the market which fits perfectly with Apple’s position at the higher end of the computing and mobile industries. But for me, these are the exact reasons it’s spells the end of Apple. Apple are not about buying existing brands and selling them alongside their products, they are about buying products or software, repackaging them as Apple and building them into global brands (i.e. NeXT becoming OSX, SoundJam becoming iTunes etc.)

Do we really think they’re going to do this with Beats? Would they remove the Dre brand? Will they just be called ‘Apple Beats’? I don’t think so. In fact, this looks like they’re trying to piggyback for the first time ever.

This whole acquisition smacks of desperation from Apple and makes it way too obvious that they’re trying hard as hell to stay relevant. Apple are one of the most iconic brands in the world, so a diversion into another brand makes no sense at all. No doubt they’ve acquired a good business, but integrating acquisitions into existing businesses, and especially combining two massive brands, is bloody hard. Some people are speculating that Beats have some advanced technology, I’d be very surprised if this is the case. I just don’t see what they could have.

If I was you I’d short Apple…this, to me, is the first signal of a slow downward spiral.

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