Mockup of Tim Cook, Beats co-founder Jimmy Iovine, and Eddy Cue
According to the Financial Times, Apple is in late-stage talks with Beats to acquire the music streaming and headphone maker for a deal worth $3.2 billion. The deal could be announced as soon as next week, according to the report. The report adds the senior management from Beats will report directly to Apple CEO Tim Cook. The Beats headphone brand has been marketed by artist Dr. Dre for several years, and the company most recently launched a cross-platform streaming music service that has seen some success. Bloomberg News, The Wall Street Journal, and The New York Times are both corroborating the report.
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.
The potential $3.2 billion deal would mark Apple’s largest acquisition of another company ever, and would be a stark contrast from Apple’s former reluctance to making large acquisitions. Apple CEO Tim Cook recently said that Apple is on the “prowl” for more deals, and this Beats acquisition would certainly prove that…
Beats would provide Apple with experience in designing headphones, wearable devices, audio technologies, and importantly, streaming music technology as Apple moves to re-position iTunes in a world where competitors like Spotify and Pandora are growing at rapid paces.
This partnership certainly does not come out of nowhere. Apple executives Tim Cook and Eddy Cue have previously met with Iovine to discuss streaming music services and Apple and Beats have partnered up to sell Beats earphone products in Apple Retail stores. Iovine has even told interesting stories about Apple and Steve Jobs.
The New York Post gives a little more detail about the rumored deal, reporting that Iovine will be joining Apple’s executive team as a “special adviser to Tim Cook on creative matters,” according to the Post’s sources.
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This excites me very much,
Could really expand and improve apples earbud range.
Iv been waiting for beats to go on sale
Lol Jony I’ve been waiting for beats to go on sale.
I ALWAYS WONDERED WHY APPLE DO NOT MAKE GREAT EARPIECES
Beats by Dr Cook
Beats headphones are the ugliest I’ve ever seen. I hope this is about their music streaming service.
Can’t wait to buy my first Aluminum and Safire coated headsets!
Beats may be where the money is, but I’d prefer that Apple acquire Sennheiser.
MEE TOOOOO
beats sucks as a speaker :(
hope it gets better w/ Apple
True that!
The sound of Beats headphones are horrible. The noice cancellation just makes everything muddy and the bass is too dominant and inaccurate! – No details left at all!
I’d rather they buy Grado even though there not for sale
What the hell?! Their first 7 figure acquisition talks and they pick a company like beats that has crappy hardware (something apple is really good at) and a streaming service (something Apple already has, all be it is not very good at). I can’t square this decision. Is it a talent acquisition? That’s hefty price tag. I just don’t get it.
Apple does not have an on-demand streaming service (Spotify competitor).
you’re looking for albeit, not “all be it”
I wouldn’t call their hardware crap. It’s not the best out there and its overpriced like no tomorrow, but it’s also far from the worse hardware on the market.
It’s overpriced, breaks easily and according to The Wire Cutter isn’t great in the sounds the department — I certainly wouldn’t call it good.
Good fit between these two brands.
Let’s hope that they kill off the headphone division. Embarrassingly bad and a complete ripoff.
I wonder if they have deals with record companies that Apple doesn’t or deals with anyone that Apple couldn’t get. Probably a long shot, but maybe it was Apple’s way of buying into those areas. Also, they have solid product development people. I wouldn’t purchase Beats for any reason because I prefer other style closed or studio monitor headphones, but they’ve made an insanely popular brand. If this deal goes through it’ll be interesting to see what happens to Beats. Can’t imagine them continuing to produce something that doesn’t have Apple’s logo/branding all over it and I don’t know that you’ll see as many athletes sporting them if that were the case.
I wonder if the reason is for Apple to shut down Beats streaming service. I think Cook was in Santa Monica a week before the launch, and this was shortly before Apple launched iTunes Radio. Maybe it’s worth $3Bil to take back this lost userbase. I doubt if they have much interest in the hardware, but perhaps the brand name….
Still a much better investment than NEST, Beats are in demand, and the design team must be doing something right right up there in terms of “desirability” and mass market appeal, at least in the US. This looks like a smart investment given apple’s core strength in hardware and the market that beats has made for itself in a short amount of time. I bet HTC will be killing itself for selling its 25% stake for around 250 million just last year. Apple seems to be paying 3x time that much. I just feel that Cook and Co. have been presented a vision of what hte company wants to do in the future and feel they can contribute to make a lot of great products that make a lot of money.
I hope that these are just rumours with no real grounds. Otherwise, I can’t believe that Apple is going to spend $3.2b for a company that might never generate the same return in the future. I just don’t see how it is going to add value to the existing Apple products to compensate $3.2b paid.
Exactly. This doesn’t make any sense.
” I can’t believe that Apple is going to spend $3.2b for a company that MIGHT never generate the same return in the future.”
Uh, that’s why it’s called an investment.
Nothing is ever a sure thing, despite your perceived value or lack of knowledge as to how they will integrate the products into their own brand.
Chad, you are partially right, there is always a risk involved. There is also a notion that a buyer (in this case Apple) knows something that we don’t that makes an acquisition feasible.
In this case, however, we all know the background: Apple has never spent this kind of money at once before, previous acquisitions were around 10 times less smaller than this one and they were all well integrated into the current products (Touch ID, Siri, etc). With this one we don’t how it is going to add value to the products and the price is huge.
Thats assuming that apple is looking to add value to its existing products. We do not know what beats shared with apple in terms of its overall revenue projections, and under development products. We also do not know what apple wishes to achieve out of this acquisition. What is known is that apple has been talking to Beats management for a while, and those would have probably focused on the future where both companies see each other benefiting the eventual plans. At least Beats has the desirability for its products that have a mass market consumer base atleast in the US.
@Ivan: The information that we know is quite scarce. What Apples paid in the past for starters is completly irrelevant, each deal is made on its own merits so it’s not that big a deal really. Beats has a portfolio that can complement Apples existing lineup. Music has been huge for Apple in the past decade so the headphones side of things is a bonus. More so, I imagine the streaming service is hugely of interest, especially being on-demand which complements iTunes radio.
Given the sudden influx of purchases around wearables of late by Apple, I imagine it is highly likely that Beats had something behind closed doors in that field too that Apple was interested in. After dabbling in phones and their focus on personal audio, it seems likely that Beats was at least exploring the technology in some capacity.
Apple can pay billions for other companies, sues Samsung for billions but receives stolen intellectual property itself. I wrote the “What will your verse be?” bit for the “school project” Dead Poets Society that Apple uses to sell iPads. Apple won’t even respond, not one word.
http://igg.me/at/NicholsonScience/x/6911023
Stop spamming this crap.
Yeah, it is pointless. It hurts to be now hated as well as abandoned by those who once so openly admired that they sent their favorite sons to my feet. I only wish I could forget as well.
What if Apple was trying to start an on-demand music service, but record companies were demanding a huge premium and negotiations were stretching out into next year?
Then it would make sense to buy Beats. Why not Spotify? Way too expensive. Rdio is the only other competitor at scale, and probably affordable. But with Beats they also get the #1 audio accessories brand, plus they prevent competitors from selling Beats co-branded products.
If Apple want to increase music quality while not just change to lossless. Beats are overpriced and don’t have pro-quality audio that you can get from Shure,
Well this sounds like a first… Apple blowing billions on a brand instead of innovative technology. I hope this doesn’t happen. It’s a bad move.
I’ve read through all of you trying to explain this acquisition and I think I have a much better explanation. Give this a try:
So, one of Beats Electronics’ best assets is their loyal fan base. There is a very wide majority of the country/world who stand by this brand. It pains me to say this as a devoted audiophile, but people fucking love Beats Audio. I can’t explain it, the quality of the sound and of the headphone hardware itself is a fucking mess. The headphones were received so well that Beats began licensing out their brand to smartphones (HTC, LG), tablets and PCs (HP), leaving Apple without a brand behind their audio quality. I personally know of a few people who normally would have bought a Mac or an iPhone, but ended up purchasing a Beats branded device instead. My thoughts are that they are going to bar Beats Electronics from licensing to anyone ever again ever and create an exclusivity agreement between Beats Audio and themselves. Basically I think they’re going to force Beats Audio to make all the audio hardware in Macs, iPhones and iPads. I feel like they will still be allowed to make and sell their headphones as a separate entity, but that they will no longer be producing audio hardware for Android Devices and Windows-based PCs. I think this is a great acquisition for Apple, but I think they maybe paid a little much for it. If it can swing people into buying an iPhone or a Mac, I think that it will be worth the $3.2 Billion easily.
There’s some good money wasted.
I don’t see the fit. The two companies couldn’t have more in common. The headphones are gimmicky and the streaming app sucks.
Why exactly does the streaming app “suck”? I’ve been enjoying it immensely since it was released…
No way! It would be much better if they used Bose!
Typically you find deals between companies and big content owners do not transfer in an acquisition. So I think it’s quite likely the only immediate benefit Apple would get from the music subscription side would be the technology. They would likely have to re-negotiate all those licensing deals anyway to takeover operations of the music subscription service.a
Reblogged this on Apple Deaf News.
Meh. Beats are way over-priced, non-audiophile quality, and all about image. In a year or two, people will grow tired of them and move on.
This is purely a strategic move. No one in their right mind would pay for those crappy, some might say even dangerous, Beats headphones. I suspect this has more to do with the agreements the Labels have made with Beats Electronics rather than simply a software or hardware acquisition. Let’s speculate a bit.
What if the Labels want to use Beats as a way to weaken the iTunes juggernaut. Perhaps, they gave Beats favorable licensing agreements in an effort to destabilize Apple’s grip on all things music. This purchase would give Apple oversight and control over these agreements. The transaction also eliminates an uprising competitor. I suspect that Apple will let Beats products and services ‘wither on the vine’ while they exploit these licensing agreements.
The downfall of Beats electronics is no real loss to anyone, save the urban market. It might even save those fools from permanent ear damage. On the other hand, the streaming service is rather contradictory to Apple’s overall business model. Remember Apple made $16 bn last year from iTunes software and services. Since they don’t break that down into sub categories it’s tough to gauge what percentage of that is music downloads, but I suspect its significant. I also suspect their Radio service is losing money. I believe Apple will refuse to innovate streaming music distribution because they simply prefer ownership over subscriptions. They see it as a fundamental moral issue rather than a technical one.
So how does Beats fit into the Apple culture? Not sure on this one. I highly doubt we’ll ever see MacBooks with ‘Beats’ speakers in them, or even an Apple surround sound system. Apple’s past acquisitions have proven insignificant when they remain only subsidiaries, but rather instrumental when they give them a competitive advantage over rivals. I seriously doubt Dr. Dre will be a member of Apple’s executive team and Iovine will only play an ‘advisory’ role. Perhaps, they’ll start a publishing arm within the iTunes ecosystem in an effort to thwart the music Labels. I, for one, would relish the thought of musicians using iTunes as the primary tool to publish and distribute their music directly to their fans, eliminating the endless middlemen that have infected the industry for decades. If this is to be the case, then an epic battle will be waged over this.
And what’s this all mean for the happy music lover? It means we’ll continue to have fewer choices for how we listen to our music while it continues to be locked behind Apple’s neglected and bloated behemoth, iTunes. Ultimately, all mergers and acquisitions fall on the shoulders of the customers. They own it, but we have to pay for it whether we like it or not. .
One question: WHY?!
Thank goodness the grammar nazis got here. Their would be a negative affect on the discussion’s if we didn’t have there guidance.