We've all heard the theories about why Apple paid $3 billion to buy Beats Electronics: a way to grab real estate on customers' heads ahead of the coming wave of wearable tech, a way to transition customers from downloading tunes à la carte to subscribing to an all-you-can-hear music buffet and a way for Apple to restore its mojo in the absence of Steve Jobs.
But larger questions persist: Will Beats' co-founder and CEO Jimmy Iovine be amenable to rebranding his name with a lowercase "i" and capital "O" to better fit the iOS ethos?
Why did Apple pay billions for headphones but only $450 million for NeXT? NeXT not only brought them a cutting-edge computer company but brought Jobs back to Apple. Is it because accessories like headphones are a lot more profitable than computers – as every retailer knows?
On the premium paid for Beats, Rob Glaser, chairman and interim CEO of RealNetworks, points out that Beats is far more profitable than NeXT ever was. He says Apple is acquiring Beats for the brand, the coolness factor and access to a music service.
"Post-Steve [Jobs], Apple has a desire at some instinctive or emotional level to make sure that it's perceived as cool and hip and culturally relevant," says Glaser about the importance of bringing Dr. Dre and Iovine aboard.
Glaser says part of the purchase represents validation of his streaming music model for Rhapsody, which now has about 1.7 million subscribers. Rhapsody was founded a decade ago, well before the phrase "cloud-based" entered common usage. Beats Music, a streaming service started early this year, reportedly has about 250,000 subscribers.
Not everyone agrees that Beats Music was a lure for Apple. According to Jonathan Sasse, a digital media consultant who helped launch the Rio PMP 300, the first portable MP3 player, "Beats Music is still a fledgling service that lags well behind many others in the industry and doesn't likely add much to the $3 billion price tag."
More importantly, Sasse says, "Accessories and style are driving new consumer purchases. As consumers continue to buy accessories at a high premium, the fashion of technology is playing a much bigger role."
One needs to look no further than what tops this year's list of recommended Father's Day gift ideas from consumer electronics chain Best Buy: Rockfish indoor/outdoor speakers and Beats by Dr. Dre wireless headphones. Both are curvy, shiny and Bluetooth-enabled.
As the Beats tagline for its multiple models of Bluetooth headphones goes: "Feel the music. Not the wires."
According to Ben Arnold, an industry analyst for the NPD Group, a market research firm in Port Washington, N.Y., it's becoming a Bluetooth world. U.S. retail sales of binaural (two-ear) Bluetooth headphones doubled to $280 million during the May 2013 to April 2014 period vs. the same months the previous year. The leading brands in order of sales were Beats, LG, Jaybird and Motorola.
In the category of Bluetooth speakers, annual sales reached $896 million compared to $380 million the previous period. That's a market growth of $500 million. The leading brands were Bose, JBL, Beats and Jawbone's Jambox.
According to Beats, its brand grabbed 57% of all U.S. premium wireless headphone sales in 2012 and 2013. Not bad for a company founded in 2008.
Perhaps the real reason Beats became the apple of Apple's eye is that it gazed into its mobile screens and saw blue. And we don't mean IBM.
So, what does it all mean culturally? The ascension of mobile devices that play music through earphones has made parks, beaches and subways less noisy. One measure of the shift from public to private listening can be seen when you enter the words "loudspeakers" and "headphones" into Ngram Viewer, a program that measures the frequency of phrases appearing in books scanned by Google.
From 1970 to the late 1990s, mentions of loudspeakers maintained a constant rate. Headphones were a distant second, but the word entered an upward slope about 1980 as Sony introduced the Walkman. The categories' line graphs crossed over in 1998, and since then "headphones" have remained well on top.
Interestingly, references to the phrase "ghetto blaster" trumped "boombox" from 1979 through 1994, when the terms crossed over and the politically correct "boombox" stayed on top through 2008, the end point of available data.
It's the 25th anniversary of Do the Right Thing, the Spike Lee move that among other things starred a boombox carried by a man called Radio Raheem (Bill Nunn) who blasts Public Enemy's "Fight the Power" wherever he goes. Somehow, the music would not have made the same impression if Raheem had been wearing headphones.