Music Business

Apple In Talks To Buy Beats Electronics, $3.2 Billion Said To Be Mostly For Headphone Business

Beats-electronics-logoApple's king of creating hardware/software/services ecosystems at scale! Beats Electronics virtually invented both headphones and the playlist!! Together the two can rule the land of streaming music and related gadgets!!! What's weird is that the only overwrought aspects of those previous lines are my writing. Apple and Beats Electronics are a potentially great combo at multiple levels from hardware to curated music services. However, for the moment, talks between Apple and Beats are ongoing and "unconsummated" and the $3.2 billion price tag is said to mostly be for the headphone business.

Yesterday news broke via the Financial Times that Apple and Beats Electronics were discussing a $3.2 billion acquisition of Beats Electronics, both the headphone/hardware business (Beats By Dre) and the streaming music service (Beats Music).

The talks have since been confirmed by various reputedly entities like the NY Times citing "people, who declined to be identified" who say that:

"A deal has not been consummated, and the negotiations could still fall apart…But if it is completed, the sale could be announced as early as next week."

The New York Post kicks things up a notch with a claim by "two sources" that "Jimmy Iovine is in talks to join Apple as a 'special adviser' to Tim Cook on creative matters."

9to5 Mac takes a historical perspective pointing out that "Apple CEO Tim Cook recently said that Apple is on the 'prowl' for more deals."

Dealbook also notes that:

"In its most recent earnings call, Mr. Cook said that Apple had acquired 24 companies in the last 18 months."

"'We are expanding Apple’s products and services into new categories, and we are not going to underinvest in this business,' Mr. Cook said in the earnings call."

$3.2 billion would be Apple's biggest acquisition to date:

"Beats Electronics, the headphone company, is said to have accounted for most of Apple’s proposed $3.2 billion purchase price."

Peter Kafka, given the absence of news, cuts to the chase to tell us what Tim Cook is actually thinking and provides us with solid reasons that Apple would make such a move.


Hypebot Senior Contributor Clyde Smith (@fluxresearch) posts music crowdfunding news @CrowdfundingM. To suggest topics about music tech, DIY music biz or music marketing for Hypebot, contact: clyde(at)fluxresearch(dot)com.

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1 Comment

  1. APPLE + BEATS: Apple should cut all ties and run! Help stop it and sign.
    The market has clearly communicated that it doesn’t like the idea of a Beats deal with Apple. However, most naysayers and the media have struggled to properly articulate the reasoning for the bearish sentiment.
    This is how it should be communicated:
    – Beats should be viewed as a fashion company, as they offer very little value-add from a technology perspective. Beats main market are teenagers who currently view the earphones as a “cool” fashion statement. This is the root of the concern, as we all know that fashion statements quickly become “uncool” due to overexposure, boredom, or something more “cool” coming onto the market. It would be fair to say that the best days of the Beats “coolness” are behind it, and the sunset looms as they may soon become “un-cool”. Paying $3.2 billion for a company that will probably fade away into “un-coolness” soon is probably not a wise acquisition. One cannot buy long term “coolness”, as it must be created or earned.
    – Apple could relatively easily create a superior headphone product at a fraction of the cost of the Beats acquisition, and Apple products are still very much “cool” and in fashion
    – Apple could improve its streaming service for a fraction of the cost of this deal, and Apple subscriptions and profitability would remain leaps and bounds ahead of the Beats service.
    On balance, very poor judgement at the top of Apple if this deal actually goes through.

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