Apple buys Beats

Apple has finally confirmed that it is buying Beats Electronics in a deal worth $3 billion. Nearly a month after the Financial Times broke the story that Apple CEO Tim Cook was interested in the audio company, it has been made official. It has been an interesting saga since that leak, with reports this morning even suggesting Apple had cooled its interest.

Apple’s initial offer for Beats was said to be $3.2 billion, but after seeing a party inspired video in which Beats co-founder and rap superstar Dr Dre proclaimed to be “the first billionaire in hip hop,” Apple was said to be unimpressed. That minor bump in the road was brushed aside, but Apple also worried about the fact that the relatively new Beats Music streaming service only had 110,000 paying subscribers.

That low number was enough for Apple to apparently lower its offer from $3.2 billion to $3 billion, the final price of the deal. Whether Apple did re-negotiate will probably never be revealed and Cupertino is unlikely to admit it lowered its offer for its shiny new toy. Now that Apple has confirmed the deal, the questions can now start in earnest about exactly what the iPhone maker has planned for Beats.

Many have questioned the amount of money Apple had to pay for a company that does not look like it will be a cash cow. However, while $3 billion is no drop in the ocean, it is a number that Apple can ride if the deal does go sour and the Beats brand fails under Apple’s stewardship, as it did when HTC owned nearly half the audio company. To ensure that does not happened, Apple has confirmed that Dre and Beats co-founder Jimmy Iovine will be brought into the Apple fold, but under what capacity has not been revealed. The company has only revealed that Iovine and Dre will work with Eddy Cue on music products.

On headphones alone, Apple won't recoup its $3 billion investment any time soon, no matter how desirable and vogue those cups may be. Apple has said that it will offer Beats Music alongside iTunes Radio as separate entities. This story is of course still developing so we will be giving you more details as they emerge.


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Luke Jones

Luke is the editor of DailyiPhoneBlog.

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