Apple eyes smart headphone play with Beats deal
By Chantal Tode
May 12, 2014
Wearables need a dose of style
Apple’s reported interest in acquiring Beats Electronics for $3.2 billion could pave the way for a push into the wearables category, with headphones as the smart device instead of a watch or glasses.
Smart headphones already exist and Apple has previously shown interest in looking at new ways to use its headphones, having filed a patent last year for headphones that know when the user is speaking. For Apple, which has been plagued with assertions that it has lost its touch for innovation, smart headphones could give it a way to revive its reputation for transforming a hardware category through sleek design and consumer-friendly use cases.
"From a challenge standpoint, the Beats product has traditionally been more of a fashion statement vs. the best acoustic performance," said Tom Edwards, vice president of digital strategy at The Marketing Arm, Dallas.
"The foundation for a smart headphone would have to be built from the ground up unless Apple has been working towards smart headphone technology and wants to leverage the power of the Beats name by integrating the tech with the fashion focused Beats hardware," he said.
"The opportunity for Apple is to take the fashion aspect of the Beats brand and create smart headphones that seamlessly connect with iOS to create new points of connection and utility that consumers might find compelling."
With Google Glass not likely to gain mainstream adoption for some time and Nike’s Fuelband faltering, the wearables market looks ripe for innovation.
There is a lot of interest in the wearables category, with many believing it will be a significant mobile category going forward, with the potential for use cases in fitness and health, payments and other areas for consumers in addition to gaming.
For example, in March 2014, Facebook agreed to acquire Oculus VR for around $2 billion. The company makes virtual reality headsets.
Already, some forward-looking marketers are experimenting with applications for Google Glass and other wearables to see how consumers engage with them.
In the United States, the Intelligent Headset from GN is currently available for pre-order for $420. It has built-in gyroscope, GPS and compass to tell users where they are and which direction they are facing.
They also connect to a smartphone or tablet via Bluetooth.
Several apps are supposed to be forthcoming, including a music player with 3D audio and an interactive auditory maps app.
If Apple were to acquire Beats, it would be its biggest acquisition ever.
Beats could be a good match for Apple in that it has a similar premium positioning, with Beats reportedly owning 57 percent of the premium headphone market in the U.S.
Beats also has a streaming music service, an area that Apple desperately needs to build its chops in as digital downloads are slowing down in the wake of the popularity of streaming services such as Spotify, Pandora and others.
Apple launched iTunes Radio last fall but it has yet to make much of an impact.
Without a strong role in streaming, Apple is jeopardizing its dominant role in digital music that it built up with iTunes.
"The key to unlocking the potential of wearable devices is tied to finding the perfect intersection of fashion and function," Mr. Edwards said. "Smart Headphones have the opportunity to seamless integrate the two.
"Looking at the rapid funding of 'The Dash' smart headphones show that there is potential demand for smart headphones that can extend beyond simply funneling audio sound," he said.
Chantal Tode is associate editor on Mobile Marketer, New York
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