Apple in talks to buy Beats Electronics for $3.2 billion

“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,” Matthew Garrahan and Tim Bradshaw report for The Financial Times.

“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,” Garrahan and Bradshaw report. “A deal of this scale 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,” Garrahan and Bradshaw report. “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.”

MacDailyNews Take: Oh, yes, absolutely “savaged.”

• Samsung beats Apple’s volume – a race Cupertino does not run – and loses badly to Apple’s profits – May 8, 2014
• Samsung Electronics replaces mobile design head over lackluster Galaxy S5 phone – May 8, 2014
• Canaccord: iPhone 5s top seller at all major U.S. carriers – May 8, 2014
Apple smashes Street with revenue of $45.65 billion in Q214 – April 23, 2014

How will Apple ever survive such raw, unbridled savagery?

Garrahan and Bradshaw report, “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… The pricey deal is likely to raise questions about Apple’s internal capability to innovate after the death of Mr Jobs in 2011.”

Read more in the full article here.

MacDailyNews Take: Beats. A triumph of marketing over sound quality.

Hopefully, if the deal goes through, some part of Beats’ Music subscription service will be worth it.

61 Comments

  1. Hi everyone. I’m 57, so maybe I lack perspective on this – does Apple stand to gain anything from a headphone vendor with a small volume music streaming service?
    dan

    1. CORRECTION: Previously, we reported that Apple is in talks to acquire Beats. We should have reported instead that Apple is I talks to acquire BEETS, the largest producer and license holder of the theme to the syndicated 1960s TV show “Green Acres” starring Eddie Albert and the eternally glamorous Zsa Zsa Gabor, who portray successful Manhattanites who decide to become farmers. The show’s laugh track is epic.

      It’s a laugh riot, although not as good as “Mr. Ed.”

      The management sincerely regrets the error.

  2. Beats are some of the worst headphones I’ve ever listened to! Not to mention the outrageous price. Apple wouldn’t gain anything from this they already have better audio.

  3. If this is true, the only reason I can think of adding a company like this is Apple looking to release some sort of HUD/Personal Display Device like the Oculus Rift/Sony Morpheus. Not that apple couldn’t design their own headphones around this display but maybe they feel the beats tech and brand would add value and a cool factor. To back up this thought up they have been beefing up their patents around the HUD http://www.patentlyapple.com/patently-apple/2014/05/apple-advances-their-personal-display-headset-invention.html

  4. Forget about the hardware; that’s probably got nothing to do with it. Apple presently has next to nothing in the way of a streaming service, whereas Beats has an excellent new service that rivals Spotify, et. al. If this rumor is true, Apple will have a viable competitor to what is arguably the future of music delivery.

        1. Don’t see any racism in his post. Yours on the other hand, seems to imply that rap music is somehow race exclusive. That seems more racist that the OP.

          1. No. The service offers a lot more than rap. To insinuate that, just because Dre is a principal, that that’s all they have is quite ignorant…and racist.

            1. Totally agree, not to mention it was meant as something of a joke. Lets keep a sense of perspective here especially as plenty of real or implied racism passes through these portals with barely a mention.

      1. Beats Music is more than rap. Their catalog is wide and deep, with tons of jazz and classical in addition to pop, rock, and most other genres you can think of. Plus, they have “curated” playlists, some of which are quite excellent. I don’t mean to sound like an ad for Beats music, but it has become my go-to streaming service, displacing Spotify in the process. And frankly, given the absurd valuations and acquisition prices of late, $3.2B seems like a pretty good price.

    1. No kidding. My daughter has some Dr. Dre headphones that sound lousy and are uncomfortable (how much else can go wrong with a set of headphones?). Say this ain’t so unless Apple has something up its sleeve we don’t know about.

  5. If you look at apples track record..when they acquire other company’s they are generally after other technology..in most cases something that hasn’t been released yet..or they are trying to improve upon something they already have..I don’t think it has anything to do with the headphones or the streaming service..I believe it has to do with their laptop audio systems and their cellphone incorporated speaker system..but more than likely this deal will fall apart..beats is to pushy to give up all rights..and apple is to smart to let someone else have any decision making power at the end..

    1. There is no tech (hardware or otherwise) in the Beats line of hardware that Apple couldn’t develop for themselves. Furthermore, there’s no audio tech out there that would sell for more than a few tens of millions of dollars (if that). This is not Apple’s focus, nor should it be. I still believe that if the story is true, they’re buying it for the streaming service and for the deals Iovine and company have in place. I think it’s a good move and as a share-holder, I whole-heartedly approve.,

      1. The ONLY justification I can think of is that Apple wants to have the streaming service, and the record companies won’t deal with Apple without trying to extract exorbitant funds/concessions, so Apple is buying Beats because they have already negotiated favorable terms for music streaming that Apple couldn’t get itself.

  6. I can only think that Apple is aware of some superior tech that the Beats music streaming service has that is easier to buy than to re-engineer.
    There’s nothing about the headphone and hardware part of the business that I can see Apple wanting. Talk about well marketed crap!

    1. I would agree with you ninetimesoutoften however the pill by beats puts out good sound at a high volume where most other portable speaker devices crackle and pop like a record..

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