Why Apple should buy Starbucks
Am I taking crazy pills, or did the internet just give me two hilarious pie-in-the-sky Apple acquisition articles in the span of three days?
On March 26th, The Street posted an argument for why Apple should throw down the cash to buy Netflix. Not to be outdone, Cult of Mac followed that lead and made a claim that Apple should actually buy Yahoo. Well then! Apple's going to go bankrupt if it keeps making all these really great, totally not dumb business decisions!
Apple should buy Yahoo
The following quotes come from Mike Elgan's Cult of Mac piece on Apple purchasing Yahoo.
When Google announced Android Wear, they did so on their own blogging platform, Blogger, and also on their own social network, Google+. The Google+ announcement happened in the place where the company can and will build a community around the product.
When Apple wanted to create community around its iPhone 5c product line, it did so on its own social site where Apple and iPhone fans gather to exchange stories, information and ideas around their iPhone 5c fandom - post pictures, recommend apps and get to know each other over their shared passion.
Just kidding. Apple doesn't have a social site.
Apple did it on Tumblr, which is owned by Yahoo.
I'm not being sarcastic here when I say that I never thought I'd see Google+ used as an example of a lead Apple should follow. The gist of Elgan's argument is that Apple needs a social home that can be the "go to" for fans of its products and, presumably, where Apple can control the message. That's simply not needed, and anyone spending more than five minutes on Twitter, Facebook, or even Google+ can attest to that.
Apple's presence is already felt across all the major social platforms thanks to stellar mobile products and a massive user base that demands to be on the front line for new apps, updates, and changes to the mobile web. Apple launching a social push for the iPhone 5c on its own social platform -- as opposed to Yahoo-owned Tumblr -- would have had no benefit, and would likely have hindered the reach of the message.
Apple users are consistently cited as being the most loyal customers around, so while a company like Google might benefit from keeping its customers in a dome where exposure to its own brand is at its highest level, Apple benefits from spreading its message across any and every website, blog, and network in existence. Apple doesn't worry that the outside world will steal its customers away; It uses its customers as messengers to recruit more into the fold.
Product announcements and marketing has moved away from press releases and toward social networks. But Apple doesn't have one.
Nor does it need one. You can often find out about official Apple announcements faster from Twitter and Facebook -- where users carry the message willingly and with passion -- than you can from dedicated news sites, and light years ahead of the mainstream media. Nothing about Apple's current volume, which is already deafening thanks to fans, suggests it needs to be turned up any higher at the source.
If only there was a social photo sharing site where both professional photographers and knowledgeable and enthusiastic amateur photographers already gather and that already has millions of users existed - that would be a great place for Apple to send iPhone pictures by default.
Oh, wait. There is such a place: Flickr, which is owned by Yahoo.
Elgan argues that Apple's mobile devices take stunning photos, but the quality is then diminished by sharing those snapshots to existing social networks where they are often compressed or otherwise altered.
Do you know who makes those social networks popular for photo sharing? The hundreds of millions of users that upload photos every day and are totally fine with the current quality options. And, as Elgan mentions himself, there are other options available, such as Flickr, but the fact that these uncompressed avenues of photo sharing aren't the default for the vast majority of iPhone (or Android, or Windows Phone) users is precisely the reason why Apple wouldn't benefit from taking one of them over.
There is, of course, a class of iPhone users that demand the highest resolution available when sharing photos, but those people already use the existing options, and there are dozens on iOS, including the built-in shared photo album feature. Why invest money to take over a platform that your customers are already using? It's one of those "Why buy the cow when you can get the milk for free?" situations. If you're using Flickr on an iOS device, Apple already won.
Apple has mostly burned its bridge to Google+ and, in any event, that network has become over-run by Android love and Apple hate that it's a toxic culture for Apple to enter at this point. (As a Cult of Mac columnist who practically lives on Google+, I see this anti-Apple tendency every week.)
Didn't I just read about how Apple needs its own social home, like Google+? Hmm, interesting how it's now labeled "toxic." In what way would an Apple-flavored social platform not fall victim to the same attitudes? We're not given an answer.
Apple brought in nearly 64 million - significantly fewer people than AOL, Glam Media or The Weather Company.
But, wow, what could Apple accomplish with more traffic than Facebook?
It's also worth pointing out that Apple is a laggard in the harvesting of user data. Which is great, if you're a privacy enthusiast, which hardly anyone really is.
Apple has gained a lot of good will by being as transparent as possible about government access to user data, as well as its own gathering of usage metrics. To say that Apple is somehow so out of touch with users that it needs to up its harvesting of data at the potential expense of this free positive publicity is beyond confusing.
I'd also argue that the number of "privacy enthusiasts" is not only much higher than it is made out to be here, but growing exponentially every day.
Acquiring Yahoo would bring Apple amazing attention and traffic, social sites Apple could control, high-quality destinations for the high-quality pictures and videos that Apple's high-quality products enable people to generate, better social signals and the ability to make more money from fewer ads.
The only attention it would give Apple is a lot of confused people scratching their heads.
Apple should buy Netflix
The Street's Richard Saintvilus recently penned an article about Apple buying Netflix. The article's current title is "Why Apple Should Buy Netflix," but its original headline was "Apple's Plan To Buy Netflix." You can imagine the hurricane of dissent the original title caused when readers, who were expecting to read about an official or rumored Netflix buyout, were met instead with a sketchy opinion argument, but I digress. Let's hit it.
With investor fear rising about Netflix losing a substantial portion of its customer base, Cook should go after Netflix now and use its offer with Comcast as leverage. If Apple is successful at improving viewer engagement, Netflix may see a mass exodus of its customers.
This should give you a good idea of the general tone of the piece, which is not so much about why Apple should buy Netflix, but why Netflix would benefit if Apple bought them. Two very different arguments. We do eventually get to see hear what perks Apple would allegedly gain from the deal, though.
If Apple is in position to receive exclusive line access from Comcast, Apple -- if it so choose -- can squeeze out Netflix by reducing its costs. Netflix is already paying a significant amount of money to upgrade the quality of its public line from Comcast after Netflix customers complained of poor reception.
Tim Cook is paying attention. To ensure that he hits a homerun[sic] within the living room, he has to make an offer for Netflix. Acquiring Netflix will also usher the "new Apple" that Tim Cook desperately wants to evolve. Whenever acquisition rumors surface, we've become familiar with the standard line of how Apple "only buys small companies.
It's been a while since I read two more contradictory paragraphs written back-to-back. First we're told that Apple could squeeze Netflix out of the streaming game entirely, if the rumored deal with Comcast comes to fruition. Then, not two sentences later, Tim Cook "has to" try to buy Netflix.
Neither is true, of course, and if Apple's plan for the living room is indeed a flat-rate streaming service -- as opposed to simply a streamlined iTunes affair on the big screen -- Netflix would still have an edge with its original programming push, which continues to grow, not to mention its huge number of existing users who adore the service.
Tim Cook can announce his presence with authority by landing Netflix. But it's not just about vanity. Apple needs Netflix and its 44 million subscribers. With Netflix projecting to growth subscribers by another 3.85 million in 2014, Apple would acquired close to 48 million viewers worldwide.
If Tim Cook is worried that not enough people know he's the CEO, he could buy a two-hour spot on every network, in primetime, and have a fireside chat with the world, but something tells me he's not actually concerned about that. At all.
As far as Apple needing Netflix and its 44 million subscribers, I'm not exactly sure how this half-baked plan would work, or if the author even has a theory. Does Apple buy Neflix and then just run it as-is, or do they integrate it into their own streaming service (which doesn't exist yet), or does Apple kill it and hope everyone migrates to its own service?
Oh yeah, none of these would work. I'm glad we had this discussion.
In regards to both of these articles, I know it's tempting for all of us to imagine that slapping an Apple logo on something automatically means it would be a blinding success, but that's simply not how this all works.
Apple has risen to the top not by slapping its logo on everything in sight, and its attempts to do so in the mid-90s led to fragmentation of its message and a lot of failed products. Apple is in a position where people can theorize about huge acquisitions precisely because they don't make these kinds of moves.
They're fun thought exercises, and make for some pretty interesting arguments on both sides, but they never materialize. And it's far more easy to come up with an off-the-wall acquisition argument than it is to actually think it all the way through to its inevitable conclusion. For example:
Apple should buy Starbucks
Starbucks serves over 60 million customers every week. Can you imagine the kind of brand synergy Apple could tap into if every single one of those cups of tasty roasted bean juice had an Apple logo on the side? That's the kind of loyalty only a mostly-deniable caffeine addiction can provide.
Apple's could capitalize on the mobile payment revolution thanks to Starbucks and its exploding app payment growth. It is estimated that Starbucks accounted for a full 4% of mobile payments in the U.S. last year, via its mobile application which rewards customers and encourages regular visits. In 2013, Starbucks raked in over $1 billion via mobile.
By purchasing Starbucks, Apple gets a massive slice of the mobile payment pie without ever speaking the forbidden letters "NFC," and taps into a customer base that has nothing better to do than drive three blocks away to make a coffee they could have made in their own kitchen. True dedication.
Apple could make the Starbucks mobile app an exclusive to iOS, or at the very least slim down the features of the app on competing platforms, encouraging adoption of iPhones and iPads while at the same time strengthening the unwritten rule that only MacBooks should be used in coffee shops. I mean seriously, take your 4-year-old Toshiba to the landfill.
Starbucks posted revenue of $13.29 billion in 2012, so it's clear that Apple could afford to purchase the company outright -- and everyone knows that if you can afford to buy another company, that's definitely a good reason to do so.
I mean, what can go wrong? Ignoring the tens of thousands of employees, operations in other countries, and being seen as a bunch of fools for purchasing a company it doesn't need, it seems like a solid business decision.
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