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Apple rumoured to be in talks to acquire Beats for $3.2bn

by Mark Tyson on 9 May 2014, 11:30

Tags: Apple (NASDAQ:AAPL), Beats Electronics, PC

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Apple is said to be in talks with Dr. Dre's Beat's Electronics in an acquisition that would be Apple's biggest yet, valued at US$3.2 billion, according to The Financial Times. The report also claims that the deal could be announced as soon as next week.

Beats was founded by rapper Dr Dre and music producer Jimmy Lovine in 2008 when they started producing a variety of high-end audio products. The company also recently launched a subscription music streaming service, Beats Music, rivalling the likes of Spotify.

The purchase agreement will see Apple talking over both the Beats Music streaming service alongside the company's audio equipment arm, including its popular but pricy line of headphones. Beats currently controls 27 per cent of the $1.8bn headphone market as a whole, and 57 per cent of the 'premium' headphone market.

Beats Music currently has a catalogue of more than 20 million songs, and CNET reports that "Data from the Recording Industry Association of America found that paid subscription services grew the fastest of all digital formats last year, rising 57 per cent, while revenues from permanent digital downloads that are iTunes' specialty declined 1 per cent."

This deal could potentially enter Apple into two rapidly growing markets at once; strengthening its online music offering and gaining a stronger foothold in the music accessories business at the same time. Apple has been rumoured to be making a move into the subscription music business for a while now and the acquisition would definitely give the company a jump start.

However, some may deem Apple's move confusing as the company already has its own iTunes store, currently the world's largest music download service and iTunes Radio which was launched last year.

An analyst with Forrester, James McQuivey, stated that there was a big overlap of customers between the two companies, reports the BBC. "This is really puzzling," he said. "You buy companies today to get technologies that no one else or customers that no one has. They must have something hidden under the hood."

HEXUS Forums :: 13 Comments

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I have to say I had a small chuck to myself over this :)
No no no no no no no no no no no no no! Please no! They might think they'd be improving their audio but I want my future apple devices to be capable of producing more than a lump of 60Hz “bass” accompanied by white noise. Go and buy Creative or Sennheiser instead!
Ha ha ha ha ha just goes to prove how much of a fashion accessory an apple product is! No one in their right mind would buy a pair of those over priced awful sounding headphones. For at £100 less you could actually buy a decent sounding pair of headphones.
Just goes to show you how marketing works, people are suckers for an endorsement and a bit of shiny, shiny. Most people haven't the faintest clue what quality sound actually sounds like, instead they love the boom, boom, boom.

I'll stick to my Sennheisers thanks.
Who says Apple wants beats for its headphones? They launched a streaming service. Is this not their backdoor into making money from Android users without having to dirty their itunes brand?

Also don't forget the beats brand (brand images is important here) goes from strength to strength despite being pretty average headphones. I doubt Apple would do a macbook or iphone with ‘beats audio’ engraved on it but you never know. Does seem alot of money for the brand, but then Apple has huge cash reserves doing exactly ‘jack’.