Apple buys Beats Electronics for $3 billion, Iovine and Dr. Dre to join company

Posted:
in General Discussion edited July 2015
Following weeks of speculation and rumors, Apple on Wednesday officially announced it acquisition of Beats Electronics for a reported $3 billion, with co-founders Jimmy Iovine and Dr. Dre expected to join the Cupertino, Calif. company in as-yet-undisclosed executive roles.


Beats by Dre posted this image to Twitter
shortly after Wednesday's announcement.


The highly anticipated -- and controversial -- sale includes Beats' subscription streaming music service Beats Music and Beats Electronics, which produces high-margin audio equipment like headphone and speakers. The deal will also bring on Beats co-founders Iovine and Dr. Dre, whose real name is Andre Young.

"Music is such an important part of all of our lives and holds a special place within our hearts at Apple," said Tim Cook, Apple's CEO. "That's why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world."

Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time.

"I've always known in my heart that Beats belonged with Apple," said Iovine, who was a personal friend of late Apple co-founder Steve Jobs. "The idea when we started the company was inspired by Apple's unmatched ability to marry culture and technology. Apple's deep commitment to music fans, artists, songwriters and the music industry is something special."

While Apple's announcement touched on all Beats assets, of special interest was Beats Music which launched in January. Industry watchers speculated that the now-official deal was crafted to tie-in Beats Music with iTunes Radio, thus giving Apple an easy road into the world of subscription music streaming, though reports say the service will be kept a separate entity for now.

Others guessed Apple was eyeing Iovine and Young, who would be brought on as an acqui-hires. The music mogul and hip-hop star have considerable sway in the industry and could help secure content for Apple's fledgling streaming service.

"Music is such an important part of Apple's DNA and always will be," said Apple SVP of Internet Software and ServicesEddy Cue. "The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years."

The deal is expected to close in Apple's fiscal fourth quarter pending regulatory approval.
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Comments

  • Reply 1 of 217
    awilliams87awilliams87 Posts: 264member
    Apple ][ ? Your thoughts?
  • Reply 2 of 217
    almondrocaalmondroca Posts: 179member
    WWDC is getting even more interesting.
  • Reply 3 of 217
    Well I'll be damned.
  • Reply 4 of 217
    SpamSandwichSpamSandwich Posts: 28,788member
    Well, shit. I guess that settles that.

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

    [QUOTE]Apple said it would pay $2.6 billion in cash and $400 million in equity for Beats Music, a subscription music-streaming business, and Beats Electronics, which makes pricey headphones, speakers and audio software.

    Beats co-founders—rap star Dr. Dre and music mogul Jimmy Iovine —will join Apple, and Apple will continue to use the Beats brand, a first for the company.
    [/QUOTE]

    [QUOTE]Mr. Iovine, a longtime friend of Apple co-founder Steve Jobs, said the two men's titles would simply be "Jimmy and Dre."[/QUOTE]

    Ack!

    $3 billion for a veneer. Consider me shocked and a bit disappointed.
  • Reply 5 of 217
    saareksaarek Posts: 1,029member
    Man, they could've bought a company that makes real quality sound equipment like Bowers & Wilkins.

    No way Beats is worth this much!
  • Reply 6 of 217
    asdasdasdasd Posts: 4,945member
    Absurd.
  • Reply 7 of 217
    notownnotown Posts: 39member

    Coincidence Apple announces this on the same day Samsung has their little "Digital Health Initiative"? I think not. Apple says, two can play the upstaging game.

  • Reply 8 of 217
    andysolandysol Posts: 2,506member

    There has to be something behind the scenes we aren't aware of.  Otherwise- this is such a weird acquisition.  $3b isn't a blip on Apple's radar... but still....

  • Reply 9 of 217
    Quote:

    Originally Posted by saarek View Post



    Man, they could've bought a company that makes real quality sound equipment like Bowers & Wilkins.



    No way Beats is worth this much!

    What makes you think apple bought them only for their sound equipment? You do realize they have a streaming music offering as well, right?

  • Reply 10 of 217
    iaeeniaeen Posts: 588member
    Well shit. I guess I'll wait to hear Cook's rational, but in the meantime I'm not super happy about this.
  • Reply 11 of 217
    ttollertonttollerton Posts: 139member
    Good grief. Maybe proofread JUST THE HEADLINE before publishing, AI? I get that you want to be first to the presses with the story, but at least get the headline abstract grammatically correct. :)
  • Reply 12 of 217
    hmurchisonhmurchison Posts: 12,113member
    Quote:

    Originally Posted by saarek View Post



    Man, they could've bought a company that makes real quality sound equipment like Bowers & Wilkins.



    No way Beats is worth this much!

    Think Iovine not speakers.   You can source great speakers all over.   This is about the talent and vision. 

  • Reply 13 of 217
    lord amhranlord amhran Posts: 902member
    Be interesting to see what they do with it.
  • Reply 14 of 217
    flash_beezyflash_beezy Posts: 239member
    Aww lawwdd
  • Reply 15 of 217
    saareksaarek Posts: 1,029member
    ibrewster wrote: »
    What makes you think apple bought them only for their sound equipment? You do realize they have a streaming music offering as well, right?
    Yes, one with a tiny amount of market penetration. Sure, there conversion rate for said service is impressive, but most of the customers are likely fans of Dr Dre & the expensive yet cheaply designed headphones that they offer.
  • Reply 16 of 217
    mjtomlinmjtomlin Posts: 1,693member
    Quote:
    Originally Posted by saarek View Post



    Man, they could've bought a company that makes real quality sound equipment like Bowers & Wilkins.



    No way Beats is worth this much!

     

    Whatever developments come out of this acquisition will eventually be well worth $3 billion. Especially if it drives iTunes Radio adoption and iTunes media content deals.

  • Reply 17 of 217
    saareksaarek Posts: 1,029member
    hmurchison wrote: »
    Think Iovine not speakers.   You can source great speakers all over.   This is about the talent and vision. 
    So chuck a billion dollars his way & save the other 2 billion.
  • Reply 18 of 217
    saareksaarek Posts: 1,029member
    mjtomlin wrote: »
    Whatever developments come out of this acquisition will eventually be well worth $3 billion. Especially if it drives iTunes Radio adoption.
    Getting the service into other primary markets such as the UK would be a great start. They're really dragging their heels on this, it's a shame they don't invest a similar priority into their customers overseas.
  • Reply 19 of 217
    spartanspartan Posts: 21member
    Quote:

    Originally Posted by saarek View Post





    So chuck a billion dollars his way & save the other 2 billion.

     

    Agreed. This is more about Iovine then anything. Streaming service was then next (ways to improve iTunes).

     

    Dre and the headphones/beats stuff were just part of the package (kinda like when you marry and you get the in-laws).

  • Reply 20 of 217
    bighypebighype Posts: 148member

    Tim Cook confirmed for one of the worst CEOs in Apple's history. He will go down like Ballmer. It won't be long before he starts throwing chairs around as their competitors start eating into their revenue more and more.

     

    He bought two people for $3 billion dollars? What a complete tool!

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