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.
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?
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.
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.
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).
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...
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.
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.
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
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
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.
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.
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.
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.
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.)
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.
