
Apple in talks for $3.2bn Beats deal - doh
http://www.ft.com/cms/s/0/e330e830-d6f3-11e3-b95e-00144feabdc0.html
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codezero
This doesn't seem likely. Apple doesn't make acquisitions this large
historically and for that price they could acquire Jawbone and get speakers,
Bluetooth headsets and a great health tracker plus all the talent that goes
with them.

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rm445
Beats is a big brand. Despite snootiness from audiophiles, the 'goodwill'
value of the business must be significant.

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codezero
But does Apple retain acquired brands? I can't remember them doing that and I
can't see a MacBook with Beats Audio rather than a MacBook. So if they don't
keep the brand what are they getting? And if they do keep the brand how do
they integrate it with their monolith?

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edgrimley
This doesn't seem like a typical Apple acquisition.

Historically Apple buys enabling technologies and IP and not marketing/market
share/customers (headphone biz), which is what they would be getting here.

I doubt this is for the music service, which is rumored to be having
challenges - both internally and with customer acquisition.

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threeseed
Something interesting though.

Beats has a popular cross platform music player app. iTunes is under immense
pressure from apps like Spotify who are far more youthful, fun and social. So
having a decent app for Android/Windows would be useful and Apple definitely
doesn't have any experience in house.

Also just saw this comment about the app, "ATT put it on my phone without
warning me or asking me if I wanted it." Existing carrier licenses to
preinstall iTunes on Android could be useful.

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001sky
"Existing carrier licenses to preinstall..."

This is a interesting point, but such contracts don't always freely transfer
to an acquirer in an M&A situation. Depends on how they are written ("change
of control" etc).

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ChrisDiNicolas
Its about biometrics. New bread of apps will require new sensor for
healthcare, mood analysis, heart-rate, etc. Those will be embedded in the
headphones. Beats offers a large market of potential sensor installations.
Patent reference image:
[http://i.dailymail.co.uk/i/pix/2014/05/01/article-0-1D824543...](http://i.dailymail.co.uk/i/pix/2014/05/01/article-0-1D82454300000578-293_306x330.jpg)

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robg
I don't know why you got downvoted, because this is exactly the only reason I
can see. Embedding these capabilities in an existing big brand provides both
literal and figurative cover. People already love walking around wearing their
Beats. Adding heart(Beats) makes alot of sense especially since music is
designed to influence how we feel.

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zimpenfish
This is the only thing that makes sense to me - Cook specifically said
"getting people to wear something is hard" when talking about the wearables
future and like you say, people are already wearing millions of pairs of
Beats...

With optical pulse sensor and accelerometer for step counting, it's the
easiest "slip personal health tracking under the rug" play there is.

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pedoh
Not a whole lot of detail, but here's a non-paywall article on Business
Insider: [http://www.businessinsider.com/apple-to-buy-
beats-2014-5](http://www.businessinsider.com/apple-to-buy-beats-2014-5)

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loso
I know a lot of people don't like the quality of Beats but they are great for
listening to hip hop and other bass heavy music. Still I am surprised by this
Apple purchase. I would assume the tech would power their headphones for now
on? Can't imagine it is for the music subscription service

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jreed91
But thats exactly what its for. Beats has a unique streaming service thats
curated by actual humans and is what apple has been building with iTunes
radio. 3.2 Billion for that seems like a lot to me though

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loso
I would be shocked if its mostly for the streaming service since people
outside of audiophiles love Beats headphones. I won't deny that it might be a
bigger part of the sale than I initially gave it credit for but mostly? I
don't know.

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jreed91
Macstories has a great write up on the service.
[http://www.macstories.net/stories/why-beats-music-
matters/](http://www.macstories.net/stories/why-beats-music-matters/)

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jreed91
This isn't at all about the hardware but more about the streaming service and
its curation. Beats Music is curated by humans and has a unique recommendation
engine. It seems like a lot for that though.

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scelerat
Article's behind a paywall, so I can't read it.

But if I were to guess, someone at Apple is talking to someone at Beats about
something.

The meeting could be anything and someone would still write a story about
acquisition talks.

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georgiecasey
i think you've to give the story more credence. it's the financial times, not
business insider

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bluthru
This seems extremely unlikely.

Are there public numbers for how many people have signed up for Beats'
subscription service?

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threeseed
1-5M downloads of the app according to Google Play Store.

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hornbaker
Next product: Heart Beats ear buds.

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letstryagain
If the rumours are true, Apple is buying Beats because they want physically
bigger headphones to attach their (also rumoured) heart rate and blood
pressure ear monitors. It's all coming together now. We'll probably see an
announcement at WWDC next month with the products shipping before Christmas.

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heifetz
not behind a paywall [http://www.bloomberg.com/news/2014-05-08/apple-said-to-
be-ne...](http://www.bloomberg.com/news/2014-05-08/apple-said-to-be-near-
buying-beats-electronics-for-3-2b.html)

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higherpurpose
If this was around April 1st, I'd think it's an April Fools joke.

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zimpenfish
Funny you mention that...

[http://lefsetz.com/wordpress/index.php/archives/2014/04/01/a...](http://lefsetz.com/wordpress/index.php/archives/2014/04/01/apple-
buys-beats/)

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caseyf7
Can't they just dust off Lala? They must really regret killing it.

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iDemonix
That is truly the worst 'news' website I've ever had this misfortune of
visiting.

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eco
Financial Times or Hacker News?

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grecy
Paywall

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mantrax5
Beats is an empty brand, there's nothing in there that I can see is valuable
to Apple. Apple can make similar headphones and slap the Apple name on them
and there you go. Beats not needed.

Apple usually purchases companies for their people and technology, not just
for their brand. It's awkward Apple would need to buy a brand in the first
place. If the news is true, certainly things are changing at Apple.

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Maxford_Maxford
Could it be a purely tactical acquisition to take Beats branded devices off
the Android market?

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mantrax5
It would be if Beats branding on Android smartphones _even worked_.

HTC had a stake in Beats at one point, and a year or so later they sold it. At
a loss. And they didn't sell more phones because of it.

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001sky
_Popular headphone maker Beats is buying back HTC 's 25 percent stake in the
company. HTC originally bought a $300 million, 50.1 percent stake in Beats
back in 2011, and the headphone maker then paid $150 million to buy back half
of that investment last year. Today's announcement means the close partnership
between the two companies is coming to an end, with Beats buying back the
final $265 million in shares._

This is written weird, but 150+265 = $415m total repurchase or 130% of $300
million initial investment.

(If ∑=$265 was paid for the 300 million, the latter payment should have been
referenced as 265-150=$115.)

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mantrax5
Unpaywalled (there's honestly nothing interesting, so I feel ok posting this,
99% filler):

Apple is closing in on its largest ever acquisition with the planned $3.2bn
purchase of Beats Electronics, the headphone maker and music streaming
operator founded by music producer Jimmy Iovine and the hip-hop star Dr Dre.
The deal could be announced as early as next week, people familiar with the
negotiations said, but they cautioned that some details had yet to be agreed
and talks could still fall apart.

A deal on the scale being discussed would represent a radical departure for
Tim Cook, chief executive of the iPhone maker: under the late Steve Jobs,
Apple was reluctant to pursue high-profile acquisitions. Apple will acquire
Beats’ streaming music service, which launched this year, and its audio
equipment business, which includes its brand of headphones and audio
equipment. The Beats management team will report to Mr Cook, said people
familiar with the deal. Apple and Beats declined to comment.

A decade after Mr Jobs transformed the music industry with the iTunes download
store and the iPod digital music player, the deal is likely to be seen as an
admission that Apple needs to look outside its Cupertino labs to continue
making an impact. While Beats commands a leading position in the premium
headphone market, its real value to Apple is in revitalising its “cool” at a
time when iTunes has waned in popularity and Samsung’s marketing campaigns
have savaged the iPhone’s brand. Apple executives have admitted that its brand
is in need of a revamp. Internal emails released during its recent patent
trial with Samsung showed that its marketing chief Phil Schiller considered
changing Apple’s ad agency after the success of its Korean rival’s “next big
thing” campaign.

Apple is paying a hefty premium for cool: Beats took a $500m investment from
Carlyle in September 2013 that valued the company at more than $1bn. “In terms
of acquisitions, Apple has been very, very light in their activity,” said
Richard Lane, analyst at Moody’s. “I don’t think they’ve spent $1bn in any of
the last four years.”

Mr Cook said last month Apple was “on the prowl” for more acquisitions, after
buying 24 companies in the past 18 months and he was not averse to large
acquisitions.

The Beats move follows a string of high-priced deals in Silicon Valley, after
Google acquired smart home developer Nest Labs for $3.2bn and Facebook offered
an initial $19bn for WhatsApp Messenger.

One motivation for the Beats deal may lie in shifts in music consumption.
Subscription services are the biggest growth area for the music industry, with
revenues increasing 50 per cent to $1.1bn in 2013, according to a recent
report by the IFPI, the global music industry association.

But downloads fell 2 per cent to $3.93bn – the first annual decline since
Apple launched its iTunes store in 2003. iTunes is still the world’s largest
music download service.

Apple has dabbled in music streaming but never launched an unlimited
subscription service to compete with fast-growing rivals to iTunes such as
Spotify.

In 2009 it acquired Lala, a music streaming service, and last year launched
iTunes Radio, which competes with elements of Beats, as well as more
established players such as Pandora.

Mr Iovine and Dr Dre – real name Andre Young – were inspired to create Beats
by the poor sound quality of the headphones bundled with the iPod and iPhone.
Beloved by music and sports stars Beats has become a street-smart fashion
brand Ahead of Apple’s expected launch of an ‘iWatch’ accessory, Beats will
also give its designers and engineers access to years of experience in what
some see as the original “wearable technology”.

Nonetheless, the pricey deal is likely to raise questions about Apple’s
internal capability to innovate after the death of Mr Jobs in 2011.

At the end of March, Apple’s global cash pile stood at $133bn, net of the
$17bn in debt it raised last year. Since then it has raised a further $12bn,
which it said at the time was to help fund its $130bn dividend and share
buyback programme. However, most of its funds are held overseas and its
domestic cash has fallen by $16bn to $18bn since it resumed paying dividends
in 2012.

