Apple Buys "Beats By Dre" for $3 Billion (1 Viewer)

[Arizona Ron]

http://online.wsj.com/articles/apple-to-buy-beats-1401308971

Game Changer?

Apple Inc. AAPL +0.96% wants to regain the beat in its music business, which is under assault from a stream of upstarts.

The tech giant said on Wednesday it is buying Beats Electronics LLC for $3 billion to bolster a music business that has lost some of its mojo, as streaming-music services encroached on the downloads dominated by Apple's iTunes service.

In Beats, Apple is getting a music-streaming service, high-end headphones and music-industry connections. Beats' co-founders, rap star Dr. Dre and music mogul Jimmy Iovine, will join Apple.


The deal will make Apple "cool" again by uniting Mr. Iovine's feel for "the culture of young people" with Apple's "many millions of young peoples' credit cards," said Sony Music Entertainment Chief Executive Doug Morris, who, as the former chief executive of Universal Music, was Mr. Iovine's boss when he carved out a sideline running Beats Electronics. "Apple was starting to lose their edge," Mr. Morris said.

Apple didn't immediately respond to a request for comment.

Apple will continue to use the Beats brand, a rare move for a company that has almost always focused on its Apple brand. It became one of the world's largest technology companies by creating huge, new consumer electronics categories with the iPhone and iPad. But it hasn't introduced a breakthrough product since co-founder Steve Jobs died in 2011.

Also, Dre is winning the Dre vs RZA thing

 

[Brony]

Well, Apple is certainly 'edgy' now. Can't wait to see them get jiggy with it.

 

[GroveDiesel]

Seems about right. Everyone else is willing to overpay for Beats, why not Apple too?

 

[Plorfu]

These are headphones, not fellatio machines, right?

 

[Arizona Ron]

My guess is this is much more than buying a headphones. Apple will likely have these configured to iTunes to sell music through them.

 

[avoiding injuries]

I thought Beats was more about their brand than the technology. Hopefully they still remain "cool" under Apple.

 

[Ted Mullins]

Beats apparently has a music streaming service similar to Spotify. Seems like that is a big part of the appeal here for Apple.

http://techcrunch.com/2014/05/28/a-smooth-transition-from-music-sales-to-streaming/

 

[belljr]

Beats has a service for streaming and a monthly download fee or something. Not quite sure how all the music services exist

 

[Long Ball Larry]

Beats apparently has a music streaming service similar to Spotify. Seems like that is a big part of the appeal here for Apple.

http://techcrunch.com/2014/05/28/a-smooth-transition-from-music-sales-to-streaming/

Yes, this is the whole thing. But Apple is too late to the game on this.

 

[Quez]

Great time to sell. There are hundreds or thousands of competing high end headphones now. There are also hundreds of competing online music services.

I'm not really sure what Apple is doing here. HTC had a licensing agreement with Beats in their phones years ago. Apple used to lead the way, and now they are going to copy what HTC did years ago...

I think this is a bad move.

 

[Premier]

I love the Beats streaming service. Terrific product.

 

[JerseyToughGuys]

Synergy!

 

[Arizona Ron]

Great time to sell. There are hundreds or thousands of competing high end headphones now. There are also hundreds of competing online music services.

I'm not really sure what Apple is doing here. HTC had a licensing agreement with Beats in their phones years ago. Apple used to lead the way, and now they are going to copy what HTC did years ago...

I think this is a bad move.

I don't know about bad. I think they'll find a way to package all of this with their current products/services.

 

[JerseyToughGuys]

I absolutely love second guessing apple. Makes so much sense, based on their track record...

 

[[icon]]

Beats apparently has a music streaming service similar to Spotify. Seems like that is a big part of the appeal here for Apple.

http://techcrunch.com/2014/05/28/a-smooth-transition-from-music-sales-to-streaming/

Yep!

What people fail to understand is this is something like 8 days of revenue for Apple. They're not exactly stepping out on a limb with this acquisition

 

[NutterButter]

Stock up another 1% today so far

 

[NutterButter]

Beats apparently has a music streaming service similar to Spotify. Seems like that is a big part of the appeal here for Apple.

http://techcrunch.com/2014/05/28/a-smooth-transition-from-music-sales-to-streaming/

Yep!

What people fail to understand is this is something like 8 days of revenue for Apple. They're not exactly stepping out on a limb with this acquisition

Exactly. They have the 3B covered from the profit since this acquisition was first mentioned a month ago. And Beats appears to be a pretty profitable company based on the high profit margin on those cans.

 

[Premier]

How much is Apple valued at right now?

God it's comical how much money they have. I heard they are possibly going to integrate Beats into their new phones to replace their current ####ty headphones.

 

[eoMMan]

Still can't believe these huge "over the top" style headphones got popular. People look like the biggest dorks with them. It's like the current day pleated khakis.

 

[Arizona Ron]

Still can't believe these huge "over the top" style headphones got popular. People look like the biggest dorks with them. It's like the current day pleated khakis.

I wouldn't wear these unless I was DJing a party. Yeah, sitting at Starbucks with big ####### headphones looks stupid.

 

[Slapdash]

Great time to sell. There are hundreds or thousands of competing high end headphones now. There are also hundreds of competing online music services.

Except that Beats aren't really high-end, despite the marketing.

 

[[icon]]

How much is Apple valued at right now?

God it's comical how much money they have. I heard they are possibly going to integrate Beats into their new phones to replace their current ####ty headphones.

Currently valued around $550 Billion (market cap)

Apple has about $160 Billion in cash hoarded away (as of mid April)... about Triple that of the United States.

 

[Banger]

Still can't believe these huge "over the top" style headphones got popular. People look like the biggest dorks with them. It's like the current day pleated khakis.

can't agree more....I see people all around the city with those on and don't get it. You can get terrific noise reducing ear buds these days that you can easily drop into your pocket as opposed to carrying some huge set of phones around.

 

[JerseyToughGuys]

status symbol with kids 10-25

simple as that

 

[Steed]

I imagine every Apple store will have a Beats corner. Don't see how the Beats brand doesn't grow even more with that kind of backing and exposure to all the fanboys.

 

[avoiding injuries]

How much is Apple valued at right now?

God it's comical how much money they have. I heard they are possibly going to integrate Beats into their new phones to replace their current ####ty headphones.

I really like my buds. The ones I got with my iPhone 5 are significantly better than the ones I have from the 4S.

 

[[icon]]

status symbol with kids 10-25

simple as that

Yep. My GF's nephew's / nieces all want Beats soooo badly. (tweens)

 

[Quez]

I just don't understand how Apple didn't buy Waze but buys Beats. Waze sold for 1.3 billion to Google. It would have been a savior for Apples crappy mapping program, and could have opened up new revenue streams from in App advertising. Apple has enough users where they could of turned Waze into a legitimate competing mapping app to Google Maps.

If they wanted a Spotify like service they should have just built one into iTunes like Google Play did. Does Beats even have anything proprietary? Maybe Apple just bought them so they could sue other companies for making similar looking headphones.

They essentially paid 3 billion to appear cooler.

 

[[icon]]

They essentially paid 3 billion to appear cooler.

Somebody doesn't get it....

 

[Quez]

http://www.businessinsider.com/gene-munster-apple-buying-beats-sounds-like-a-bad-idea-2014-5

 

[Brady Marino]

The most pretentious phone company buys the most pretentious headphone company.

Makes perfect sense.

 

[[icon]]

http://www.businessinsider.com/gene-munster-apple-buying-beats-sounds-like-a-bad-idea-2014-5

That article is full of fail... not the least of which "beats has hardly any users", yet Apple is on record as loving Beat's ability to retain a very impressive 70% of free trial users and is on a growth trajectory comparable to Spotify's early years. Wired has clearly outlined Beats' USP as well.

I'm personally not a huge fan of the service, or the headphones... but Apple is picking up the premier headphone brand in a coveted demographic, two music industry heavyweights in Iovine and Dre, and an up and coming music service that compliments their existing offering excellently..... all for about 8 days of revenue, or a little over 1% of their cash holdings.

 

[humpback]

I imagine every Apple store will have a Beats corner. Don't see how the Beats brand doesn't grow even more with that kind of backing and exposure to all the fanboys.

Don't they already?

 

[MattFancy]

Still can't believe these huge "over the top" style headphones got popular. People look like the biggest dorks with them. It's like the current day pleated khakis.

Looks down. Wearing pleated khakis. Damn it.

 

[avoiding injuries]

I imagine every Apple store will have a Beats corner. Don't see how the Beats brand doesn't grow even more with that kind of backing and exposure to all the fanboys.

Don't they already?

I don't know if they do or not, but as soon as middle aged people start wearing them, you've lost the appeal to the younger crowd.

 

[MattFancy]

I don't believe Apple under Jobs would've ever bought Beats.

I read where Cook said that Apple "could've built their own streaming service, but didn't want to". So instead, they by Beats for their streaming service. I don't know anyone that uses Beats for streaming. I'd say the vast majority of people use Spotify or Pandora. Same with their headphones, I know they're popular among athletes/celbs, but I see more people walking around with Apple's white headphones in than I see people with Beats headphones.

 

[Ted Mullins]

Beats apparently has a music streaming service similar to Spotify. Seems like that is a big part of the appeal here for Apple.

http://techcrunch.com/2014/05/28/a-smooth-transition-from-music-sales-to-streaming/

Yes, this is the whole thing. But Apple is too late to the game on this.

I'd agree with you about it being too late if it was anyone other than Apple. I don't even know a single person that uses the Beats streaming service, but I won't be surprised if it becomes really popular if Apple does this right.

Additionally, I have no idea if they plan to do this, but IMO kids in age 16-25 range will buy iPhones over competing products with the headphones being a major factor in the decision if they decide to include Beats branded headphones.

 

[Braktastic]

Still can't believe these huge "over the top" style headphones got popular. People look like the biggest dorks with them. It's like the current day pleated khakis.

Looks down. Wearing pleated khakis. Damn it.

Looks down. Wearing non-pleated khakis. Phew!

 

[Quez]

http://www.businessinsider.com/gene-munster-apple-buying-beats-sounds-like-a-bad-idea-2014-5

That article is full of fail... not the least of which "beats has hardly any users", yet Apple is on record as loving Beat's ability to retain a very impressive 70% of free trial users and is on a growth trajectory comparable to Spotify's early years.

I have never paid for a streaming service but decided to give Google Play Radio a try about a month and a week ago. It was simple, just click a few buttons, and I was off. I got an email a week ago saying I was billed $9.99 because I forgot to cancel.

I bet at least half if that 70% forgot to cancel. A much more useful indicator would be how many of those customers stick around for 2, 6, or 12 months.

 

[Carolina Hustler]

Great time to sell. There are hundreds or thousands of competing high end headphones now. There are also hundreds of competing online music services.

Except that Beats aren't really high-end, despite the marketing.

Maybe you now nothing about sound quality and headphones, or maybe you've never tried Beats headphones, or maybe you just assumed they were crap marketed to kids who want to be flashy with the only thing going for them is the Dr Dre name..

But Beats are excellent headphones, certainly top of the consumer market for quite some time..

 

[Bob Sacamano]

I'm personally not a huge fan of the service, or the headphones... but Apple is picking up the premier headphone brand in a coveted demographic, two music industry heavyweights in Iovine and Dre, and an up and coming music service that compliments their existing offering excellently..... all for about 8 days of revenue, or a little over 1% of their cash holdings.

This seems so... not Apple, though. They're chasing it rather than building it or acquiring it in the cheap early stages. It seems like a philosophical departure for them, and that's what I'm not sure I like in this.

 

[Acme CEO]

They essentially paid 3 billion to appear cooler.

Somebody doesn't get it....

This is like saying Google spent 3 Billion to buy a thermostat. Very uninformed.

BTW Beats generated 1.2 Billion in earnings last year. Apple is paying 2.2x earnings for 'headphones' while Google paid 12x earnings for Nest.

 

[JerseyToughGuys]

all of these bad decisions are really going to destroy this company in the long run.

 

[NutterButter]

They essentially paid 3 billion to appear cooler.

Somebody doesn't get it....

This is like saying Google spent 3 Billion to buy a thermostat. Very uninformed.

BTW Beats generated 1.2 Billion in earnings last year. Apple is paying 2.2x earnings for 'headphones' while Google paid 12x earnings for Nest.

From the sound of it, Beats has a much healthier profit margin as well. This is such a non story that's only made out to be something b/c its Apple. Worst case, they'll break even, not like they need the revenue.

 

[JerseyToughGuys]

all of these bad decisions are really going to destroy this company in the long run.

well, maybe not. at all.

 

[avoiding injuries]

Great time to sell. There are hundreds or thousands of competing high end headphones now. There are also hundreds of competing online music services.

Except that Beats aren't really high-end, despite the marketing.

Maybe you now nothing about sound quality and headphones, or maybe you've never tried Beats headphones, or maybe you just assumed they were crap marketed to kids who want to be flashy with the only thing going for them is the Dr Dre name..But Beats are excellent headphones, certainly top of the consumer market for quite some time..

This seemed like a pretty good review process and Beats came in pretty low. http://time.com/74886/best-headphones/

 

[Brady Marino]

But Beats are excellent headphones, certainly top of the consumer market for quite some time..

WRONG.

They are all bass and nothing else. Those that think Beats are "excellent" have not worn a pair of Sennheiser HD-280s, which you can get for over half the price of Beats and have "excellent" quality.

 

[TheIronSheik]

This is an age thing, right? I use my iPhone provided headphones for mowing the lawn, working out and working at my desk. Never once have I thought, "Man. These earbuds suck." In fact, I've been fairly impressed with them.

I'm nonplussed as to why these headphones have become such a big thing of late.

 

[phrozen]

Still can't believe these huge "over the top" style headphones got popular. People look like the biggest dorks with them. It's like the current day pleated khakis.

I wouldn't wear these unless I was DJing a party. Yeah, sitting at Starbucks with big ####### headphones looks stupid.

my favorite are the dorks at the gym who wear these things while working out. bunch of tools.

 

[[icon]]

But Beats are excellent headphones, certainly top of the consumer market for quite some time..

WRONG.

They are all bass and nothing else. Those that think Beats are "excellent" have not worn a pair of Sennheiser HD-280s, which you can get for over half the price of Beats and have "excellent" quality.

Yeah I have to agree here. Beats are pretty widely known to be extremely overpriced for the sound quality.