Don’t Forget About Dre: Here’s What the Rap Star Will Bring to Apple



Analysts’ reactions to Apple’s (NASDAQ:AAPL) acquisition of Beats Electronics over two weeks ago have been mixed to say the least. Wells Fargo analyst Maynard Um, who currently has a “Market Perform” rating and a “valuation range” of $595.00 to $640.00 on Apple shares, described the acquisition as a “defensive” move and noted that Apple should be acquiring “offensive assets to better position itself.” Even analysts who are bullish on Apple seem to have trouble wrapping their heads around the Cupertino-based company’s $3 billion purchase of a headphones maker. Piper Jaffray analyst Gene Munster, who currently has an “Overweight” rating and a $732 price target on Apple, called the acquisition a “bad idea” when rumors of the deal first emerged last month.

On the other hand, both Um and Munster saw the addition of Beats co-founder and music industry insider Jimmy Iovine as a silver lining on an otherwise cloudy deal. “Iovine would bring music industry contacts and the design team could help with Internet of Things,” noted Um. Munster even theorized that Apple’s primary motivation for acquiring Beats was so it could hire Iovine to lead the company’s content strategy.

But it seems that both analysts forgot about Dre. The legendary rap star and music producer who lent his name to the premium headphones company he helped to create may play and even more crucial role at Apple than Beats co-founder Iovine. In a recent profile of Dr. Dre done by The Wall Street Journal, colleagues of Andre Young (Dr. Dre’s real name) lauded the rap star’s talent for immediately determining what will work and what will not. The sources also noted that — like legendary Apple CEO Steve Jobs — Dre has a reputation as a workaholic perfectionist who trusts his gut instincts above market research.

As one of Dr. Dre’s colleagues told The Wall Street Journal, Dre is a “cultural barometer” of coolness, something that even Apple — at least internally — has admitted that it has been lacking in recent years. Emails written by Apple senior vice president of worldwide marketing Philip Schiller that were entered into evidence in the last patent-infringement trial against Samsung (SSNLF.PK) revealed that the company was concerned about losing its “cool” factor to its Korea-based rival.

Samsung is “in a zone while we struggle to make a compelling brief…Something drastic has to change,” wrote Schiller to a Media Arts Lab executive, reported The Wall Street Journal. Media Arts Lab, a unit of the TBWA\Chiat\Day ad agency, has led Apple’s marketing efforts for many years. Schiller also forwarded an article from The Wall Street Journal to the same Media Arts Lab executive that highlighted the success of Samsung’s “The Next Big Thing” advertising campaign.

The ads portrayed Apple users as older and helplessly out of touch with the latest smartphone technologies, while Samsung users were portrayed as young and hip. “We have a lot of work to do to turn this around,” wrote Schiller. In this sense, the addition of Dr. Dre and his innate talent for spotting the cool from the uncool may be just the drastic change that Schiller thought the company needed.

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