The Tech.pinions Podcast: Sony, Blackberry and Apple/Beats

Welcome to this week’s Tech.pinions podcast.

This week Tim Bajarin, Bob O’Donnell, and Ben Bajarin discuss Sony and their challenges, Blackberry and their challenges and the potential deal between Apple and Beats.

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Runtime: 23:54

Published by

Bob O'Donnell

Bob O’Donnell is the president and chief analyst of TECHnalysis Research, LLC a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community. You can follow him on Twitter @bobodtech.

42 thoughts on “The Tech.pinions Podcast: Sony, Blackberry and Apple/Beats”

  1. Companies like Sony, HTC & Motorola already make great phones. Their flagship phones are arguably better than Samsung’s. Why don’t they sell well? Samsung uses a multi-billion dollar “marketing” budget to dole out huge sales incentives to carriers & retailers. They essentially bribe salespeople to sell Samsung phones over other Android phones. Maybe Sony needs to do the same?

    RE: Beats. Aside from the fact that Apple does not typically spend $billions, when have leaks of a rumored acquisition ever been this gross? It just smells fishy. Beats is getting great PR value from this rumor, which is what they’re all about. Apple must hate all this publicity.

    I also think the cultural divide between the two companies is greater than people realize. Apple places great emphasis on doing everything right, even polishing small details that consumers will never see (painting the back of the fence properly). Then they market the product.

    Beats doesn’t seem like a company that sweats the details. Their products feel cheaply made. They sell mainly because they are heavily marketed and promoted by superstars. It’s all about bling & flash, not quality or value. Their core values are polar opposite to Apple’s.

    1. Good points all around. Truth is, quite a few vendors offer “spiffs” to retail salespeople to encourage them to sell their devices. I honestly don’t know what Samsung offers versus others, but given how much market pull they create with all their ads, it may actually be less than other vendors (or even nothing at all).
      Regarding Apple and Beats, I agree that the product and company cultures seem very different, so I too am scratching my head, but as Tim and Ben pointed out in the podcast, there could be other factors there which aren’t public that are driving the interest. Will be interesting to see what happens.

      1. I tend to think there are two primary drivers (if the deal actually happens). First, Beats Music and the curation/intelligence, maybe it’s excellent. Second, Iovine (and Dre to some extent but mostly Iovine and the connections he has which could play a big part in dealmaking).

  2. Blackberry:
    It’s over, not really worth commenting on.

    Sony:
    I think they became less innovative when they became a Movie/Recording studio. The media companies have historically fought innovation in the consumer electronics industry. They fought cassette tapes, VCRs, DAT, etc…

    When Sony became a Media company, innovation first had to pass the test that it wouldn’t upset the Media company apple-cart in any way. Essentially Sony became a company that didn’t want to be too innovative, because that might in some way disrupt or challenge or even hint at challenging it’s media operations.

    Sony is never going to effectively leverage the Media assets, those assets are more albatross than benefit (other than the cash they bring in). For Sony Electronics to innovate the should be divorced from the Media company and any concerns about ruffling media company feathers.

    Sell the Media company, pay off the debts, and work unfettered on producing great consumer electronics.

    Beats:

    WTF? I keep hoping this was a bad joke. Because it really doesn’t seem like there is anything there to benefit Apple and could even harm Apples image. Some detractors already like to scoff at Apple as overpriced fashion accessories. With Beats that is exactly true, and Apple buying them, gives credence to what is currently nonsense.

    1. Come on dude, spend a few minutes looking into what Beats actually offers, it’s more than headphones. If the deal happens I’m quite sure Apple execs have done the math on the ROI.

        1. We can’t know that. And we know with certainty they don’t have Iovine. That guy ain’t nobody, he’s been around. We also don’t know how good the curation and intelligence inside Beats Music is. Apple routinely buys what they could build, because it is faster. They’ve done it before, why not now? Because *you* don’t like Beats? That’s not much of a reason. Your argument fu is weak today.

          1. So Apple is going to pay 3.2Billion to get hold of struggling music service that Beats reportedly paid about 14 million for. Beats can’t even seem to move MOG subscribers to the new service and reportedly only has ~100K subscribers.

            The ultimate bankruptcy of the Beats deal defenders is the claim that somehow Jimmy Iovine is worth Billions because of his personal genius. Does apple need a sound mixing engineer?

            Apple can afford to blow 3.2 Billion dollars monetarily.

            But they are going to have to weave one hell of a story to not look like they got suckered if they pay that much for Beats.

          2. Hmm, I didn’t say anything about how successful Beats Music is. I’m wondering if there’s something unique and interesting about the curation and intelligence of the service, something Apple wants and can integrate quickly (rather than building from scratch). Also, Iovine is much more than a “sound mixing engineer”. There could be back room deals involving Iovine in the works already worth more than $3.2 billion long term. The reality is we simply don’t know.

            This deal may never happen, but if it does I trust that Apple knows what they’re doing. It seems rather silly to analyze this by starting with the assumption that Apple execs are suckers. Especially given the last decade or so.

          3. “but if it does I trust that Apple knows what they’re doing.”

            No surprise. You just assume as a matter of course, that Apple can do no wrong. So if this deal happens, it will be a good deal.

            I think you made similar arguments about larger phones. Apple didn’t need them, because Apple wasn’t building them. When Apple does release a big phone, it will because it was the right time for infallible Apple to release a big phone.

          4. What is interesting to me, regarding Beats and Iovine, is that Iovine and Dre approached Jobs many moons ago about this service. At the time Jobs was really anti-streaming. So they pretty much had the deck stacked against them from the get go. The music industry has been trying to get Apple to go streaming pretty much from the beginning of iTunes with no success. iTunes Radio is the first time Apple as a company has acknowledged the legitimacy of streaming.

            What would be interesting to me, even though we mock the “mere” 100,000 subscribers to Beats, I’d be curious as to how those numbers compare to iTunes radio active users. I’ve used iTunes Radio once since it was introduced. But then, I’m not a fan of any streaming service except the radio in my car.

            If streaming really IS the future and Beats has that to offer I would be sure that one doesn’t get Beats streaming without Iovine/Dre. As I understand it, the algorithm is a pretty good attempt to quantify Iovine’s and Dre’s success as producers, and there really are few in the industry who match them. Maybe L.A. Reid or Cowell, but they don’t have the LONG track record of Iovine. Jam and Lewis probably have the track record, but they are more niche than Iovine. Few producers have the breadth that Iovine has. He has bridged many genres.

            What I would be most afraid of is this is somehow a music variation on Netflix and Apple is considering music producing. I just don’t see that as a winning long term service. Maybe as a hobby. But I think Netflix is going to have issues down the road, more than they do now. It would be the same for Apple.

            It might be cool if they can manage to stick with young, up and comers or otherwise unknown discovery. My favourite part of iTunes is the Discovery Downloads. I love finding music from people I’ve never heard of. Systematizing that into something more formal and streaming would be cool. I don’t know if it is worth 3.2B. But compared to what other tech companies are spending on M&A, really this is nothing.

            I can’t see this as anything else but an iTunes version of the Jobs/NeXT deal. Beyond that, I got nothin’.

            Joe

          5. You’re jumping to a lot of conclusions there. I do not assume Apple can do no wrong. They’ve made plenty of mistakes and have many areas that need much improvement. However, the success of Apple over the last decade and more makes it pretty clear the exec team aren’t idiots. I think good analysis of a possible Beats deal should start with that assumption. If you feel you should begin your analysis with the assumption that Apple hasn’t got a clue, go ahead. I’m willing to bet my analysis ‘beats’ yours 🙂

            I did not make a similar argument (as described by you) about larger screen phones. I’ve said I want a larger screen iPhone, but I’m also aware of the trade-offs involved tech-wise, and by looking at actual sales data it was easy to see that phablet sales were tiny at the time analysts were proclaiming doom if Apple didn’t build a phablet. What I actually said was I expect a larger screen iPhone from Apple, when the timing is right.

          6. “Does apple need a sound mixing engineer?”

            No, really, this is like saying Ron Howard is just some child actor.

            I don’t consider myself a “Beats deal defender”. I agree with John Kirk when he says, essentially, we just don’t know what we don’t know. It may actually end up being a jumping the shark moment. Or it may be crazy like a fox.

            Joe

  3. I just attended the ‘BlackBerry Experience ” in Toronto. I can tell you first hand, BlackBerry is not going anywhere. Give Mr. Chen a few more years and BB10 will be front and center with all the G20 governments, hospitals, police forces and yes, consumers. I find people who have nothing good to say about BlackBerry 10, have never tried it out for a good measure of time.

  4. Well it’s official now. Apple bought Beats.

    They are now officially a purveyor of overpriced fashion electronics. Something detractors have thrown out there for years, but this deal makes true.

    The esteem that I once held Apple in, has fallen yet more with this deal.

  5. “Apple today announced it has agreed to acquire the critically acclaimed subscription streaming music service Beats Music, and Beats Electronics, which makes the popular Beats headphones, speakers and audio software.”

    The thing to note is that Apple lists “the critically acclaimed subscription streaming music service Beats Music” first. The headphones are second. As I said before, I suspect Beats Music is actually really good, and that has a lot of long term value. Forget about the headphones, this deal was never about headphones. It’s about the music service and Iovine.

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