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The Real Reason That Apple Bought Beats

|Includes: Apple Inc. (AAPL)

Beats is riding a trend away from music of convenience and toward music that is hi fidelity. Over the last twenty years, thanks to the iPod, ear buds, mini stereo systems and data compression there has been a gradual loss of fidelity in the music most of us hear. Most people have been happy to follow this trend. There is nothing inherently wrong with the trade off of Hi Fidelity in exchange for being able to have 10,000 of your favorite tunes in your pocket. Unfortunately, this trend has left a gaping hole in the world of Hi Fidelity music listening. I think that Dr.Dre and Iovine are right in their belief that when people return to the Hi-Fi experience they will embrace it with open arms. The return to true Hi-Fi is going to be a huge trend in music listening. It would not surprise me at all if there is a sound partitioned room added to every flagship Apple Store where one can listen to real Hi Fidelity sound equipment. Not just Beats equipment. All sorts of Speakers, Amplifiers etc. in different combinations. The acquisition of Beats will mark the return to the model of the audio stores of the 70s like "Tech Hi-Fi". 'Beats' will be the audio department at Apple stores. This is why Apple bought 'Beats'.

This trend will provide Apple a huge moat, at least in this country, where listening rooms have all but disappeared. Good luck listening to music at a department store. Even if Samsung produced high level speakers customers would have no where to go to have a comparative listening experience; that is unless Samsung's speakers were judged as being good enough to be displayed in the 'Beats' Listening room at your nearest Apple store.

Both Dr.Dre and Iovine know what Hi-FI audio can be. How many of you have been in a pro studio console room listening a the final mix of what will soon become a hit record? These two cats hear it all the time and both are frustrated by the weak representation of their work that the accepted standards of audio equipment provide. The studio experience is the experience that Beats wants to share with the world. That is their vision. It doesn't matter that much if Beats current line of hardware sucks! Apple can help Beats with their vision using Apple's team of engineers who will make Beats' engineers feel like children. The Beats headphone will get much better under Apple's wings. NO DOUBT! Equally improved will be the audio department at Apple stores through Dr.Dre and Iovine's vision.

The following Page has a link to a 40 minute interview between Mossberg and Iovine which confirms my assertion of Iovine's Vision:

Disclosure: I am long AAPL.