
Apple Close to Buying Beats Electronics for $3.2 Billion - personjerry
http://www.forbes.com/sites/briansolomon/2014/05/08/report-apple-closing-in-on-dr-dres-beats-for-3-2-billion/
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UnoriginalGuy
Essentially just a brand and distribution channels for $3.2B (if true). That's
quite a hefty price tag for a company which has no unique technology or USP.

I wonder if Apple plans to slap those farcical Beats stickers onto Macbooks
and screw up the audio balance in order to "improve" the listening experience
(and by "improve" I mean heavily degrade, see HTC's phones).

I won a pair of Beats headphones in a competition. Worth £130 (per Amazon,
£200 retail) and in a blind test I prefered my £55 Sony ones. They just sound
better, simple as that...

~~~
IBM
Unlike most Silicon Valley acquisitions, Beats has profits. They sell high-
margin headphones with 60% market share of the over-$100 headphone market.
Apple is going to be getting into wearables, and this is the original
wearable. They'll probably continue to run the unit separately because the
brand is too valuable to just throw away. Audiophiles can pan the headphones
as much as they want, it won't be any different from when PC geeks proclaimed
they could build a PC with better parts for less without paying the "Apple
tax". They aren't relevant. And if the margins are as high as some claim,
Apple would have all the flexibility to improve the Beats line with better
materials and construction.

[http://www.fastcompany.com/3015051/major-beats-beats-
electro...](http://www.fastcompany.com/3015051/major-beats-beats-electronics-
may-be-on-track-to-hit-14b-in-2013-revenue)

~~~
h4pless
In regards to Beats' profits, I believe Beats, much like Apple, is a brand
who's value is pinned largely to the guy who's at the head of the ship. With
Apple, people knew that Steve Jobs had amazing stylistic and functional taste
in products. Because nothing was produced while he was at the helm without
first being approved by him, people could trust that each iteration of product
line was something they would want by nature, the only question would be
whether or not they wanted it enough to pay the premium.

When Steve passed(RIP), Apple took a large hit to their product appeal (which
I don't believe has yet been fully realized) because while Apple can still
make high quality products, they don't have Steve Jobs, the guru of computer
style, there to give his stamp of approval that not only is this the high
quality product you've come to expect from Apple but it is also designed for
use by humans and "cool".

Next, Apple brought its tastes/decisions into question with the changes to the
iPhone design and iOS, the introduction of the iPad mini... a lot of things
that beg the question, "Would Steve have really gone for this?"

Enter Beats by Dre, another brand that seems to have its value pegged to the
guy who appears to be giving final approval to the products, so much so that
he put his name is on all of his products. It has been confirmed that Beats
makes great products, so people now trust the brand. They can go into the
store and pick up the newest whatever by Beats and can rest assured that it's
going to be not only very high quality audio, but it also has Dre's signature
that the component ain't nuthin' but a G thang.

Like you said, Beats has profits. There is no real reason for them to want to
sell except that they want to get out while they're in a strong position. My
guess would be that Dre feels that he's done enough good work and he wants to
get out for a boat-load of money so he can start another venture or focus on
making music.

There's no real reason for Dre to stay with Beats if its acquired unless it's
part of the deal, but if that was the case one would again wonder why the good
doctor would be selling the company in the first place. But for Dre, even if
he was to retire from the audio component game, his claim to fame would remain
untarnished for producing nothing but ultra high quality products. I would
imagine the stuff that was produced under him could become collectors items
like vintage Nike sneakers. Without him at the head, I see the Beats profits
going way down.

It's also funny you bring up the PC/Apple grudge match as I see this
acquisition as a deliberate play by Apple against its PC/Android rivals.

Beats by Dre is/was a major feature for companies like HP(computer) and
HTC(android). Beats bought out HTC's share of the company to end their
partnership, but I'm sure Apple wants to include Beats to their feature list
for iPhone and iPad. And HP is one of Apple's most direct competitors on the
PC market. Beats is something that HP had that Apple didn't, it was one
feature that could be better than Apple's comparative feature for all people
knew.

Well that's probably enough ranting so I'm just going to cut myself off. It's
9AM now, must work.

------
wyager
Well, Apple already has plenty of experience building mediocre headphones. The
difference is that Apple only charges $30!

~~~
brigade
Within the form factor constraints of earbuds and IEMs, you're not likely to
find better engineering.

[http://www.innerfidelity.com/content/lauding-jobs-least-
love...](http://www.innerfidelity.com/content/lauding-jobs-least-loved-
product-basic-apple-ear-bud)

[http://seriousaudioblog.blogspot.com/2013/02/hall-of-fame-
ap...](http://seriousaudioblog.blogspot.com/2013/02/hall-of-fame-apple-in-ear-
monitor-addiem.html)

~~~
2muchcoffeeman
Thanks for posting those links. I don't think many people have actually
compared the Apple ear buds and canalphones to anything.

They are really good value for money, especially if you are after an inline
remote. It's difficult to do better without spending more money.

~~~
wyager
>It's difficult to do better without spending more money.

[http://www.amazon.com/Klipsch-Image-S4A-In-Ear-
Headphones/dp...](http://www.amazon.com/Klipsch-Image-S4A-In-Ear-
Headphones/dp/B008VHHYLW/)

Just a little more money. About $15 more, significantly higher quality.

~~~
invisible
I think that's essentially what was being said already... 50% more expensive,
15% better.

------
jws
Where could Apple go with headphones? Consider the interest in watches as a
more accessible control for iOS devices in pockets or purses.

• iOS control integration with buttons on the cans.

• Touch based rotary controls for volume and scrubbing.

• Integrate a short range Kinect style scanner in the front of a can. Now you
can control things with hand gestures in front of your body.

Don't get your hopes up, but it's worth visioning a little. There is a
demographic that wears headphones. I'm not able to come up with an information
display angle for headphones, but input is good.

------
protomyth
Beats is worth more than AMD? This is sad.

~~~
mm0
margins.

------
StudyAnimal
Man Forbes is an annoying site, I try to scroll down to the comments, and
before the comments load it jumps to another story.

But anyway, its a bad idea. The sort of people that care about quality know
that beats are absolute shit. They get mocked relentlessly. Apple doesn't want
to be associated with that.

------
keypusher
Apple getting into the headphone market makes sense, they certainly sell a lot
of earbuds with their iPods and Iphones. And I could definitely see a more
feature packed set of quality headphones being a great idea, there's enough
extra space in a pair of studio monitors to cram some electronics. But "Beats
By Dre"? These headphones are complete garbage, they are a $25 pair of
headphones with the name "Dre" on them and a $150 pricetag. If Apply wants to
make a splashy aquisition they should buy Sennheiser, Audio-Technica, Shure or
something similar. High quality products with years of audio experience and
manufacturing capability.

------
raincheck
How many people remember that Beats was created by the same folks who brought
us Monster cables? Only they got taken to the cleaners by the current
management. This is the company Apple is (apparently) buying for $3.2B. It
doesn't seem like a good cultural or strategic fit in any way.

[http://gizmodo.com/5981823/beat-by-dre-the-inside-story-
of-h...](http://gizmodo.com/5981823/beat-by-dre-the-inside-story-of-how-
monster-lost-the-world)

Also, was it coincidence that Katie Cotton announced her retirement yesterday?
I can't imagine what the press release will say...

------
abalone
See previous thread here:
[https://news.ycombinator.com/item?id=7718223](https://news.ycombinator.com/item?id=7718223)

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jonah
Well, this one's not a technical acquisition.

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coreymgilmore
Apple spending money because it can? I would think Apple has plenty of
knowledge in the music world and could hire some talented personnel instead of
buying an entire company. Beats has value, but I'm not sure if its $3.2B.
Their products are okay but not anything segment-leading.

Kind of like the Oculus buy by FB, they have the money...spend it!

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amolsarva
If this happens my respect for apple falls

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cordite
I'm guessing that HP won't be having those weird commercials about having
beats in them anymore.

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pbreit
I don't see how this makes sense. The headphone business is small. There's no
way any favorable music deals would be transferable to Apple. Tim Cook going
to Jimmy for creative advice would piss off employees. I don't believe Beats
has much IP. Anyone have ideas here?

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beltex
_Beats CEO Jimmy Iovine in Talks to Join Apple as 'Special Adviser'_

[http://www.macrumors.com/2014/05/08/beats-jimmy-iovine-
join-...](http://www.macrumors.com/2014/05/08/beats-jimmy-iovine-join-apple/)

~~~
rhgraysonii
Jimmy Iovine is one ruthless bastard. I'm not sure how I'd feel about him
joining Apple.

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moeedm
If true, they're really buying Jimmy Lovine.

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pptr1
I am not really sure why they want to buy Beat for that price. What is the
strategic advantage in buying Beats?

~~~
notatoad
it probably has more to do with Beats Audio (and by extension, MOG) than with
headphone technology. And the Beats brand has a fair amount of value, although
i don't think apple really needs that.

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benhamner
If this is true, who benefits from leaking it & in what way do they benefit?

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blackjack48
I feel like Misfit would have been a better "wearables" acquisition.

------
kevando
WWSJD

