Apple + Beats = More Dr. Dre, less earbud?
Apple could be on the verge of its first multi-billion dollar acquisition. The Cupertino-based tech goliath is reportedly in talks with Beats about a $3.2 billion purchase of the company.
Beats, founded by Jimmy Iovine and rapper Dr. Dre, is known for its candy colored headphones and its new music streaming service, Beats Music.
If this deal goes through, it would be Apple’s largest acquisition to date. The second biggest was the 1997 purchase of Next software for $400 million — the deal that brought Steve Jobs back to Apple.
“That is Apple’s history of acquisitions, they always do small, as we call tuck-ins, just to fill gaps in their technology or their product line, says Mike Levin, with Consumer Intelligence Research Partners. “So you would have to ask the question: What kind of gap does Beats fill?”
Levin says it’s highly unlikely Apple is interested in high-end headphones. It’s the subscription based music streaming service, Beats Music, that’s potentially most valuable to Apple, whose existing music empire is built on 99 cent downloads. “The iTunes store, after growing explosively for several years, has kind of stagnated,” says Levin.
Apple did create iTunes radio, but it’s not subscription based, and services like Pandora and Spotify have been much more successful.
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