NEWS: Apple acquires Beats for $3 Billion (Update: Full interview on recode.net)

[cat6man]

Perhaps this is possibility for improvement, or perhaps they won't change a thing and just rake in profit.

 
according to the NYT this morning, mfr cost of Beats is as low as $16 (cheapest model i assume)

 

[VAF Research]

  I think that assuming Apple will do anything obvious is a bad idea. This happens because they don't give any hints about what their plans are, which are very often not what people expect when it comes to new markets. If they are going to buy them, then they have something in mind far more interesting than just buy-and-label-in-store.

I think that's an excellent call. If any of us could guess what Apple were up to we'd be worth our weight in gold. Apple "own" the pocket (go with me here) and their next biggest competitor is Samsung, who have a much broader reach in terms of TV, lounge room etc. Beats happen to have a number of clever products/patents in small transducers that could be used in lap-tops (already are?) or even TVs. Jiminitro has also made an insightful comment - the obvious defensive strategy is to buy an competition and maintain share.
 
If it goes ahead you can be sure there is a lot of mental horsepower behind the decision.

 

[GloryUprising]

Well if they get Jimmy Iovine in the deal, I think its actually a good move for Apple in terms of future negotiations with recording labels.  Benefits both traditional iTunes and future streaming services.
 
....damn never thought I'd see the day then I'd use "iTunes" with the term "traditional"....
 
#supportyourlocalrecordstores!!!
 
EDIT: Not sure the branding angle works either; Apple is already a master at branding already and historically Beats branding doesn't mean much.... Just ask HTC. =p

 

[Mediahound]

Apple knows what they are doing. They see the Beats music streaming service as competiion; makes sense to buy Beats before that barely even gets a foot hold. 

Hopefully they'll kill off the headphones.

 

[ToddTheMetalGod]

   
according to the NYT this morning, mfr cost of Beats is as low as $16 (cheapest model i assume)

I knew it was low, but that is just sickening 

. Well then, hopefully Apple will make new models that actually take advantage of the sound quality potential of such a high price point and great marketing schemes.

 

[Ruppin]

As a serious Apple user, and long time shareholder, I am so distressed by this acquisition that I was motivated to post after having been inactive on Head-Fi for about 6 years. Hi Friends, I'm back.
 
Apple is paying too much for too little. Apple has made money with style, but it was almost always quality and ease of use first, and glitz second. Cook is a marketing guy, under pressure to do something with the company and justify his CEOishness. There is nothing more dangerous than a CEO looking to justify his existence. Remember the worst corporate acquisitions of all time (although admittedly larger than this one): Compaq, AOL. To those who have speculated on the value of the streaming service, I doubt that Apple either could not design a better one, or acquire a better one.
 
Just one added thought: does one refer to Beats as "anti-intellectual property."

 

[kurochin]

  There is nothing more dangerous than a CEO looking to justify his existence.

 
Beats by Dr. Cook =P
 
Joking aside, I actually prefer the post-Jobs Apple. More sensibility, less sensationalism.... at least until this Beats deal.

 

[imackler]

I wonder if this is some a move toward a Beats-branded, voice-controlled, music-streaming, bluetooth, smart-headphone synced with the iphone in your pocket. 

 

[phillkillv2]

Yay, now Apple will toss more money into their marketing plans and shove the Beats brand down our throats even further.

 

[mcandmar]

  I think that assuming Apple will do anything obvious is a bad idea. This happens because they don't give any hints about what their plans are, which are very often not what people expect when it comes to new markets. If they are going to buy them, then they have something in mind far more interesting than just buy-and-label-in-store.

 
Hopefully to liquidate and stomp them out of existence and then re purpose their manufacturing facilities and design team to make fancy big apple ear muffs.

 

[wink]

Beats me why this is going down...............

 

[AustinListens]

I don't really see the problem with this. Tons of HTC phones have been using Beats Audio and have been good phones, and any audiophile looking for clear sound isn't going to be listening on their iPhone, they're going to have a Zune HD or even something like the RoCoo P. And honestly, this is probably just more for Beats Music than hardware.

 

[JIMINITRO]

  I also find this news too ridiculous to be true. It seems like professional trolling and nothing else.
 
It's like "Omgz the two most hyped tech companies, I haz to make a troll news article about one buying the other. Fanbois are gonna droooooolllll."

Well, I guess the fanboys can start drooling. GSM Arena and others are reporting it's done. 

 

[HiFiAudio]

Reference:
Apple In Talks To Buy Beats - AudioStream
 

The Financial Times has reported that Apple is in talks to buy Beats Electronics for $3.2 billion as early as next week (see report). As the article points out: 
 

One motivation for the Beats deal may lie in shifts in music consumption. Subscription services are the biggest growth area for the music industry, with revenues increasing 50 per cent to $1.1bn in 2013, according to a recent report by the IFPI, the global music industry association.

 

But downloads fell 2 per cent to $3.93bn – the first annual decline since Apple launched its iTunes store in 2003. iTunes is still the world’s largest music download service.
 

How big is this potential deal? Let's look at some numbers.
In their recent financial report, Apple disclosed that they now have 800 million iTunes accounts most of which have a credit card tied to them. According to the Digital Music News, Beats Music has 525,000 paying subscribers as of March 2014. One basic question is how many iTunes account holders would become Beats Music subscribers? Even if only 5% buy in (40M), that would immediately dwarf Spotify's claimed 6 million paying subscribers.
 
Asymco's Horace Dediu estimates iTunes revenue for 2013 at $23.5 billion with growth of > 18% year over year (iTunes revenue is more than music including app sales). Dediu also points out that, """The iTunes 'empire' of content and services would be ranked as number 130 in the Fortune 500 ranking of companies (slightly below Alcoa and above Eli Lilly).."
In the larger context, global digital music revenues grew by 4.3% in 2013 to US$5.9 billion, according to the IFPI Digital Music Report 2014 (see report) led by growth in streaming services. Yes, iTunes total sales are larger than global digital music sales. Scary, no?
 
In our tiny end of the pond, LH Labs raised about $1.5M on their combined Kickstarter and Indiegogo campaigns and Pono's Kickstarer campaign topped out at $6M the result of 18,000+ supporters. I bring these examples up because the press, yours truly included, have used these numbers to point to the rising popularity of "better sound quality". Better than what? Better than iTunes and their lossy music download sales.
 
What does all of this add up to? Wild speculation aside, OK mostly, the recent rumors of Apple going 24-bit with their downloads (see article) fits nicely with a Beats buy, the ad copy nearly writing itself. How many people will continue to pay for lossy downloads when they can stream millions of choices in the same quality for the cost of about one album download per month? How does Apple differentiate its huge stockpile of Mastered for iTunes music downloads? By offering them in high res. And how do we enjoy these better quality versions? With a new pair of Beats headphones.
 
While CD-quality and HD downloads remain a rain drop in the sea of downloads, this potential deal between Apple and Beats could very well spur Apple's move to HD downloads. If this deal happens, its safe to say we'll see a sea change in the market and a move away from lossy downloads. I say its about damn time.

 
Remember we had that earlier rumor about Apple possibly allowing you to purchase High Resolution audio download in a couple of months, this could be the keystone to that move.  

 

[thievesarmy]

  As a serious Apple user, and long time shareholder, I am so distressed by this acquisition that I was motivated to post after having been inactive on Head-Fi for about 6 years. Hi Friends, I'm back.
 
Apple is paying too much for too little. Apple has made money with style, but it was almost always quality and ease of use first, and glitz second. Cook is a marketing guy, under pressure to do something with the company and justify his CEOishness. There is nothing more dangerous than a CEO looking to justify his existence. Remember the worst corporate acquisitions of all time (although admittedly larger than this one): Compaq, AOL. To those who have speculated on the value of the streaming service, I doubt that Apple either could not design a better one, or acquire a better one.
 
Just one added thought: does one refer to Beats as "anti-intellectual property."

 
I agree… on the surface I also don't like the deal, and I think they could have created a better streaming service on their own. However, like Currawong stated, their real motives here may not be obvious. They already acqui-hired LaLa and when that went down everyone thought they would use that as their new streaming service, but I believe all the engineers / devs from Lala were reassigned to a completely different project, and they killed the Lala service entirely. At least, that's how I recall it happening, but maybe I'm wrong.