Jimmy Iovine and Dr. Dre Unveil Beats By Dr. Dre 2011 Holiday Product Line-Up

Earlier this month, reports emerged claiming that Apple was in negotiations to buy headphone and streaming music company Beats for $3.2 billion, making it Apple’s largest deal in history. According to a new report out of the NY Post, Apple has recently dropped the price its willing to pay for the company to $3 billion. It’s unclear as to what exactly caused Apple to lower its offer, but a report last week broke down a variety of reasons as to why the deal could be delayed. One of the reasons was a vulgar video from Dr. Dre, that apparently “freaked” Apple out. It’s also possible that a leaked report claiming that Beats only had 110,000 paying subscribers made Apple even more skeptical.

Apple has also apparently just begun doing its “due diligence” on Beats. When the original $3.2 billion number was leaked, the company had not yet done any of that, and since it started, it has apparently dug up some unsettling information.

The NY Post report goes on to say that Apple’s acquisition of Beats could be announced as early as this week. Beats cofounders Dr. Dre and Jimmy Iovine are expeted to join Apple’s executive team following the acquisition. The two will also reportedly be at WWDC next week and appear on stage during Apple’s keynote.

Seeing that this newest report claims that the deal will be announced next week, and earlier reports stated that the two founders would be on stage at WWDC, it looks like we finally may be nearing an official announcement regarding the acquisition.

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15 Responses to “Report: Apple drops Beats deal to $3B, cites low subscription numbers, due diligence”

  1. patstar5 says:

    Apple bought a bad apple :)

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  2. Reblogged this on anthonyvenable110 and commented:
    Curious as to how this will all work out. But I see Beats all the time so somebody must be buying them.

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  3. Ah, what’s couple hundred million or two.

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  4. drtyrell969 says:

    Keeping dropping another 90%, and you got yourself a great deal! MAYBE.

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  5. They just keep walking that line back. They keep changing the details so eventually they can say it isn’t going to happen without actually having to issue a retraction. And I don’t the 9to5 guys, you are just passing the story along.

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  6. thebasicmind says:

    I already posted this on here a couple of days ago so apologies if you have already seen this. At first, like you, I thought the deal was a bad one. Especially when you consider Apple is one of the largest manufacturers of speakers in the world and have excellent speaker tech and electronics/sound engineers. However, there are two things that make me think it is rational and will probably be quite a money spinner.

    The first is Neil Young’s PONO Kickstarter project. I think all the major tech firms have been caught-out by how much consumer interest there is in very high definition audio. From a scientific standpoint (when “blind” sound testing is done) there is reason to think it has little value, but that doesn’t seem to be how the consumer sees it.

    The second reason is Apple’s penchant for pushing the market on to new technologies and standards. They did it with the removal of optical disks from macs, they did it with the removal of an Ethernet port from the MacBook Air, they did it with their move first away from Intel and then back again with the Mac OS. They are doing it with their conspicuous lack of USB port on the iPad and reliance on WiFi on the iPad. I fully expect they are about to do it again for what is now the oldest and most ageing form of connection on their mobile devices, the 3.5mm audio jack. I expect they will now have but one connector and serve audio peripherals needs through the lightening port. It will be possible to chain connections (a connection to power will allow you to plug in headphones as well. It may also be backed up by wireless and rechargeable headphones with a new higher throughput low power bluetooth style standard. Apple are, in other words, in my opinion, about to go all-in on ultra HD audio, and suddenly all headphones with the older jack will seem outdated (there will be a 3.5 mm converter accessory, but still all 3.5 mm headphones will overnight acquire the sheen of “old tech”) .

    Now consider there are 500 million very consumer active iOS users out there. Consider also how Apple have control over display space in their very popular stores and are able, in this regard to play kingmaker amongst the audio device peripheral manufacturers presented to customers. Consider now also how many are already Beats customers and how Beats fit in terms of design and quality materials in that environment, how consumers like the appearance diversity and individuality (even if they actually have neither). If I am right on this, I predict Beats are about to encounter a Tsunami of upgrades and Apple have figured that since they are creating this inevitability, they may as well own the company so they can take the profit. They could play king-maker with an alternative headphone manufacturer, but, in this context, you can see why none would be as attractive as Beats.

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  7. your post read as “apple drops beats deal..”i was like wtf..u sure know to surprise the readers :)

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  8. I find it difficult to believe that Apple agreed to pay $3.2bln without knowing number of subscribers from the source. And surely deal is subject to everything provided being true.

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  9. his early celebration lost them money. they were being nice though because I could bet you they could have taken more of the price and they still would have sold.

    lesson #1: do not celebrate till the deal is complete and money has switched hands.

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  10. “Seeing that this newest *report claims* that the deal will be announced next week, and *earlier reports* stated that the two founders would be on stage at WWDC, it looks like we finally may be nearing an official announcement regarding the acquisition.”

    Let’s wait for Apple to spend their money, not reporters.

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  11. I don’t buy it. It insinuates Apple is at least somewhat interested in their subscription service and made a multi-billion dollar offer without knowing how many paying subscribers Beats has. I highly doubt that.

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  12. Robert Nixon says:

    It’s also possible that a leaked report claiming that Beats only had 110,000 paying subscribers made Apple even more skeptical.

    Right, because I’m sure that was the first time Apple had ever seen any hint of Beats Music’s subscription numbers.

    Leave the analysis to the analysts if you don’t have a clue how acquisitions work, Chance.

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  13. “110,000 paying subscribers” Yikes! I don’t think I’d shell out that kind of money for that many subscribers either, if that number is to be believed. I get the feeling that long term, this investment for Apple will not be as good as it could be. That’s if the rumor is true of course.

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  14. 100K subscribers and bits hardware are hardly worth 3 billion, especially after HTC sold its share for much less.
    Even if u pay 10000$ for each subscriber the cost will be 1 billion.
    Overpriced is written all over this deal.
    I don’t think beats cofounders will be accepted at WWDC with standing ovations.

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