Why is Apple paying $3bn for Beats Electronics?
Some analysts are 'baffled' by Apple's purchase, but others say it may be their shrewdest move yet
After weeks of speculation, Apple has confirmed that it will buy headphone maker Beats Electronics and its associated music-streaming service, leaving many analysts "baffled" by the move.
The company, founded by music producer Jimmy Iovine and hip-hop star Dr Dre, will be bought for a total of $3bn (£1.8bn) – well over the £2bn price tag many had estimated.
Aside from concerns about the price, analysts have questioned whether Beats hardware will meet Apple's high standards. Leo Kelion, the BBC's online technology editor, notes that the sound quality of Beats' headphones has been criticised, despite the skill of Iovine and Dre in "building up the brand".
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Not everyone in the industry was down on the deal. Apple had been starting to lose its edge, Sony executive Doug Morris told the Wall Street Journal, but this deal will make it "cool" again. He praised an acquisition that will bring together Iovine's understanding of "the culture of young people" and Apple's "many millions of young peoples' credit cards".
Iovine, a long-time friend of Steve Jobs, will also be able to help Apple build partnerships with the music industry, the WSJ says.
Tim Cook, Apple's CEO, underlined the importance of the music content. "We get a subscription music service that we believe is the first subscription service that really got it right," he told Re/code. "They had the insight early on to know how important human curation is."
Tim Danton, editorial director and publisher of PC Pro, says that Apple's deal may turn out to be very shrewd, and should cause the company's rivals real concern. "This is scary news for every other player in the music-streaming market. When Apple fully absorbs the Beats subscription service into iTunes, it will be able to offer its music-loving customers everything they need on pretty much every platform you can think of. Plus some more that we haven’t even considered yet".
So it is worth the money? Danton believes so: "When you consider that Apple almost always gets this kind of implementation right – by concentrating so much on what people want and making it simple – that $3 billion looks like money well spent".
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Today's political cartoons - November 3, 2024
Cartoons Sunday's cartoons - presidential pitching, wavering convictions, and more
By The Week US Published
-
Why Man United finally lost patience with ten Hag
Talking Point After another loss United sacked ten Hag in hopes of success in the Champion's League
By The Week UK Published
-
Who are the markets backing in the US election?
Talking Point Speculators are piling in on the Trump trade. A Harris victory would come as a surprise
By The Week UK Published
-
How will the introduction of AI change Apple's iPhone?
Today's Big Question 'Apple Intelligence' is set to be introduced on the iPhone 16 as part of iOS 18
By Justin Klawans, The Week US Published
-
FDA OKs Apple AirPods as OTC hearing aids
Speed read The approved software will turn Apple's AirPods Pro 2 headphones into over-the-counter hearing aids
By Peter Weber, The Week US Published
-
Will the Google antitrust ruling shake up the internet?
Today's Big Question And what does that mean for users?
By Joel Mathis, The Week US Published
-
Apple unveils AI integration, ChatGPT partnership
Speed Read AI capabilities will be added to a bulked-up Siri and other apps, in partnership with OpenAI's ChatGPT
By Peter Weber, The Week US Published
-
Apple Intelligence: iPhone maker set to overhaul the AI experience
In the Spotlight A 'top-to-bottom makeover of the iPhone' sees the tech giant try to win the consumer AI game
By Harriet Marsden, The Week UK Published
-
Justice Department bites Apple with iPhone suit
Speed Read The lawsuit alleges that the tech company monopolized the smartphone industry
By Rafi Schwartz, The Week US Published
-
Apple kills its secret electric car project
Speed Read Many of the people from Project Titan are being reassigned to work on generative AI
By Peter Weber, The Week US Published
-
The pros and cons of virtual reality
Pros and cons The digital world is expanding, for better and for worse
By Devika Rao, The Week US Published