Apple is reportedly acquiring Beats Electronics for $3.2 billion, with Jimmy Iovine and Dr. Dre said to be taking senior roles at the company. Predictably, the Apple faithful are freaking out.
I spent a lot of time among these folks, back when I was writing the “Fake Steve Jobs” blog. They have a cultlike devotion to the Apple brand and are notoriously averse to change. Tell them that their beloved company is buying a mass-market headphone maker and that two guys from the rap world are about to become top executives, and yes, this is going to be a shock to the system.
The thing is, a good shock may be exactly what Apple needs.
Since Jobs’ death, nearly three years ago, Apple has grown risk averse. Its growth has stalled. Tim Cook, the handpicked successor, is a smart number cruncher, but he’s no Steve Jobs.
Iovine may not be either, but he’s closer than you might think. The two have a lot in common. Both were scrappy working-class kids whose success came not from family pedigree or an Ivy League school but from talent and chutzpah.
In 2002, Iovine was instrumental in helping Jobs persuade five top music labels to sign on to the iTunes Store, according to Walter Isaacson, Jobs’ biographer. Iovine was running Interscope Geffen A&M, part of Universal Music Group (the job he still holds). In 2004, Iovine helped Jobs broker a deal with U2 to create a special U2 edition of the iPod.
I talked to Isaacson this week. He went back to the notes he had taken while preparing his Jobs biography and found something that he didn’t include in the book, which seems massively interesting now: a comment from Iovine that back in 2002 and 2003, he wanted the Apple chief to acquire Universal. Iovine declined a request for an interview.
Isaacson thinks the Apple-Beats deal is not about headphones or streaming music but rather is about video. He speculates that Cook wants Iovine to run Apple’s content business and help Apple launch the TV product that analysts have been gossiping about for years. The product has been held up because Apple can’t get all the content owners on board.
Maybe Iovine has the charisma and connections to round up the networks the way he did the music labels in 2002, although “it’s a lot more complicated” this time around, says Isaacson. His track record of success in marrying content and tech gives that theory some weight.
Apple is undergoing a corporate blood transfusion, one that will radically change the nature of the company. Well before the Dre-Iovine deal surfaced, Cook was busy hiring a bunch of people with health industry backgrounds to work on the smartwatch. He also hired former Burberry CEO Angela Ahrendts, who knows how to sell fashion and luxury, to run Apple retail.
The Apple faithful may not like it, but they should remember that the Apple they know and love today is itself the product of an equally traumatic transfusion carried out in 1996. That was when Jobs returned to Apple, bringing along the team from NeXT, the computer company he had formed after Apple tossed him out in 1985. Jobs removed Apple’s board members and top executives and installed his lieutenants from NeXT. He killed off countless products, then started rebuilding from the ground up, using the operating system from NeXT workstations as the foundation for Apple’s future products, from the Mac to the iPhone and the iPad.
Though Jobs died in 2011, in a sense he still has been running the company. Now, with this deal, Apple fans are facing up to the fact that Jobs is truly gone and that their beloved Apple is about to become a very different company.
