Apple is reportedly gearing up to buy Beats Electronics, the headphone manufacturer co-founded by Dr. Dre and music producer Jimmy Iovine that has also spun off a streaming-music service.
The deal could cost $3.2 billion, according to The Financial Times, and would give Apple full control of the brand that’s made gigantic flashy headphones the trendiest thing to hit kids’ heads since backward baseball caps.
Does this mean Dr. Dre is about to become the newest Apple employee?
Tim Cook recently said Apple’s not afraid to do a 10-figure acquisition for the right company, but at $3.2 billion, Beats would not only be the largest Apple acquisition ever, it’d cost more than all previous acquisitions combined.
Beats has become a musical juggernaut since launching in 2008 with a line of premium headphones endorsed by Dr. Dre. The company followed up with a number of other celeb-endorsed personal audio accessories and headphones before launching its well-reviewed music-streaming service in January 2014.
Apple’s acquisition of Beats would bring some conflicts of interest because the audio giant has deals to put audio gear in HP laptops and HTC smartphones.
Talk of the possible Beats acquisition has befuddled the Internet, with tech fans questioning what the fashion headphone maker could bring to Apple’s elite brand.
Apple's acquisition strategy is BAFFLING
— J(enna) Wortham (@jennydeluxe) May 8, 2014
Was about to make fun of Beats being crappy, overpriced audio gear and then I remembered the iPod Hi-Fi.
— Dan Frommer (@fromedome) May 8, 2014
Some see Beats’ high-priced headphones fitting in perfectly with Apple’s business model. And with a flashy streaming-music app in tow, maybe Beats could provide the injection of fun and youthfulness Apple needs to revitalize its Music app and audio accessories.
Beats is a dead-on acquisition for Apple. High-margin, high-brand, pop culture electronics. Should've been theirs in the first place.
— Anil (@anildash) May 8, 2014
To sum up: Apple + Beats = high-margin hardware, music (which they love), style, cool factor, AND a premium music subscription service.
— Molly Wood (@mollywood) May 8, 2014
Apple’s first head of design, Bob Brunner, could be coming back to the company as part of the acquisition as well. If the purchase pans out, it would be eight times larger than Apple’s $400 million acquisition of NeXT Software, which brought Steve Jobs back into the fold in 1996.
Apple has yet to comment on the acquisition but both Bloomberg and the Wall Street Journal have confirmed the report through their sources.
https://twitter.com/ashleymayer/status/464536064074735616
Buster Hein is a freelance writer who lives in Phoenix, Arizona. Twitter: @bst3r.
13 responses to “Apple to buy Beats for billions? Internet wonders why”
OCI’s or patent licensing fees?
“$3.2 billion dollars – 8 times larger than the NeXT acquisition ($400,000)”
Your math is incorrect, Mr. Hein.
You’re missing a few zero’s… that’s Billion not Million try 8,000 times as much ;)
You both missed it…It’s $3.2 Billion and NeXT was acquired for $400 Million which is indeed 8 times…
“it’s well-reviewed music streaming service in January of 2014”
you answered your own question right there (and in grammatically incorrect fashion)
Snoop is already purchased by Call of Duty :)
I use Bose QC15 and they rock!
dre dre and snoop are long time racists
of course….
Ugh. Please no. Let Google own all the crap.
Beats dubious qualities aside(i’m not a fan), Apple’s making a really smart move. They’ve buying arguably the single most visible audio brand on the planet right now. Beats have done a truly amazing job of creating a brand and placing it in the market in such a way that they literally have no competitors in terms of user recognition and mind share. If they continue to use the Beats brand and strategy whilst improving the offering it’s gonna be a licence to print money.
Wall Street is scared of Dr. Dre becoming a gangsta rap billionaire because Dr. Dre didn’t go to an Ivy League university. He came straight out of Compton and he got his smarts from the street. Gene Munster doesn’t get it and probably never will. He’s too preoccupied with when his prediction of some big-screen AppleTV is going to come true.
I just don’t get how they came up with 3.2 Billion? Seems way over priced.