Apple officially closes on $3B purchase of Beats headphones & streaming service

Posted:
in General Discussion edited July 2015
Apple on Friday gave an official welcome to Beats Music and Beats Electronics, which are now a part of the Cupertino, Calif., outfit after the $3 billion purchase price was finalized.




Apple added a "welcome" page for Beats to its own website on Friday, and the official Beats site was also updated to reflect Apple's purchase. The announcements would suggest that Apple did not face any scrutiny from the U.S. government, while the European Commission approved the deal earlier this week.

In addition, Vivendi revealed on Friday that it sold its stake in Beats Electronics LLC to Apple for $404 million. The company had a 13 percent position in the premium headphone maker.

It was announced in May that Apple had entered a deal to buy Beats for $3 billion, with about $400 million of that buyout in stock. Apple's $404 million payout to Vivendi could suggest that its stake represented the stock portion of the deal.

Apple's new Beats section of its website welcomes the acquisition "to the family." It also notes that Beats cofounders Jimmy Iovine and Dr. Dre, who are now Apple employees, "have created beautiful products that have helped millions of people deepen their connection to music."

Apple said it plans to "elevate" the experience of Beats headphones to even higher levels through the purchase.

"Today we are excited to officially welcome Beats Music and Beats Electronics to the Apple family," Apple's page reads. "Music has always held a special place in our hearts, and we're thrilled to join forces with a group of people who love it as much as we do."




Over at the updated Beats site, the headphone maker has told its customers that "there's a new instrument in the Apple family." It notes that in the early days of digital recording, the Macintosh was "the instrument of choice," while the iPod led the revolution in digital music, and the iPhone and iPad became instruments of their own.

"Starting today, we at Beats are fortunate to add our instrument to this legacy by joining Apple," the Beats site reads. "The products we build together will allow us to reimagine sound once again and to continue this great tradition of bringing imagination to life."

Apple's $3 billion acquisition was not only for the Beats headphone business, but also represents Beats Music, which is an on-demand subscription streaming music service available on desktop, iOS, Android and Windows Phone. In the breakdown of the deal, Apple paid about $500 million for Beats Music, and $2.5 billion for Beats Electronics.

Though Beats is best known for its headphones, the Beats Music product received top billing from Apple when the deal was announced back in May. Apple has said it plans to keep the subscription Beats Music service intact, and as its own brand, alongside existing iTunes Radio free streaming and song purchasing through the iTunes Store.
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Comments

  • Reply 1 of 111
    kent909kent909 Posts: 709member
    Now that it is official, maybe soon the point of this will come out.
  • Reply 2 of 111
    rogifanrogifan Posts: 10,669member
    ""have created beautiful products that have helped millions of people deepen their connection to music."

    I wouldn't call this beautiful... :no: but maybe it gives teenagers a "deeper connection to music". :p

    NFC-Beats-Pill.jpg

    OT: why does this site push you over to the App Store now? I've noticed that several times this week. Quite annoying.
  • Reply 3 of 111
    SpamSandwichSpamSandwich Posts: 31,001member
    Meh. Still has the whiff of a payoff to Jimmy Iovine.
  • Reply 4 of 111
    SpamSandwichSpamSandwich Posts: 31,001member
    sog35 wrote: »
    Bravo!
    Bravo!

    This is the best!

    Apologies to all the old crusty white men here.
    Apologies to all the closet neo-nazi's.

    Ugh. I hope you understand how ridiculous your comments look.
  • Reply 5 of 111
    mpantonempantone Posts: 1,375member
    Quote:
    Originally Posted by kent909 View Post



    Now that it is official, maybe soon the point of this will come out.

    Probably not in the short term. It often takes about 18-24 months for the full impact of the acquisition to become apparent. 

     

    From the Beats hardware side of the business, they are one month into the Apple's Q4, so the impact of that portion really won't be reflected in Apple's earnings for until Q1 FY2015. More importantly is the timing of Beats product cycles and when the product line refreshes to new products designed and manufactured under Apple's umbrella.

     

    The software/service side of the business is murkier. Typically Apple's software/service acquisitions are subsumed into OS X, iOS or iCloud, and contribute across a wide spectrum of Apple's products and/or services. Whether its a more discrete service like Siri or something like the Apple Maps (which is an amalgam of their various mapping acquisitions), it is impossible to say how one single acquisition monetarily affected Apple's bottom line, at least from a revenue perspective.

     

    Both Beats Music and Apple own streaming music services had relatively few customers, it is unknown how these services will grow.

     

    Note that Apple themselves typically do not provide specific reasoning for their various acquisitions (heck, they don't even divulge a lot of them). 

     

    They did not discuss the purpose of their acquisitions of P.A. Semi (2008) and Intrinsity (2010), but the effects of both finally emerged with the A6 and A7 processors, not in specific functionality, but just in the nature of Apple's design differentiation vis-a-vis competitors' ARM implementations.

     

    My guess is that we won't realize the full impact of the Beats acquisition until early 2016 at which time it might be considered a great, good, or disappointing acquisition.

  • Reply 6 of 111
    wovelwovel Posts: 956member
    mpantone wrote: »
    kent909 wrote: »
    Now that it is official, maybe soon the point of this will come out.

    ...My guess is that we won't realize the full impact of the Beats acquisition until early 2016 at which time it might be considered a great, good, or disappointing acquisition.

    I suppose it is not big enough to be a complete disaster like Google's acquisition of Motorola, Microsoft's acquisition of aQuantive, or (soon) Facebook's acquisition of WhatsApp.
  • Reply 7 of 111
    mpantonempantone Posts: 1,375member

    Well, that's a rather different situation. An Internet ad agency with no hardware division acquired a smartphone company. Google does not have any real hardware background.

     

    Apple's business model is considerably different from Google's. The Motorola acquisition by Google was rather puzzling.

  • Reply 8 of 111
    SpamSandwichSpamSandwich Posts: 31,001member
    sog35 wrote: »
    explain.

    There a bunch of people who hate this deal for a simple fact that it caters to the urban/hip hop community.

    Are there more people who were / are opposed to it because of the low quality / overpriced junk product issue?
  • Reply 9 of 111
    zoetmbzoetmb Posts: 2,437member
    Quote:

    Originally Posted by sog35 View Post

     

     

    explain.

     

    There a bunch of people who hate this deal for a simple fact that it caters to the urban/hip hop community.


    While that's true, the deal still deserves a critical eye because you have to wonder why Apple couldn't develop their own superior headphones (and streaming service) for far less than $3 billion.     And also because in spite of Beats' tremendous commercial success, anyone who knows anything about audio would tend to agree that the quality of the audio coming through their phones simply isn't very good.   

     

    IMO, getting Dr. Dre and Jimmy Iovine isn't enough of a reason.  It's not like urban youths aren't already using Apple products and this was a market they were missing and didn't know how to get.

     

    On the other hand, paying 2x revenue for a consumer products company is not excessive at all and Beats' 2013 revenue was $1.5 billion, which was quite impressive.    That means they probably sold about 10 million headphones in that year.   

  • Reply 10 of 111
    allenbfallenbf Posts: 993member
    Quote:

    Originally Posted by SpamSandwich View Post





    Are there more people who were / are opposed to it because of the low quality / overpriced junk product issue?

     

    This.

  • Reply 11 of 111
    red oakred oak Posts: 657member

    Clicking on buy on the Beats site now takes user to the Apple Store.   It is good to see there is a highly coordinated launch and integration plan 

     

    What is odd is that it takes the user to the "iPad Accessories" section of the Apple Store.  Also, when I go to "Shop Accessories" on Apple Store, there is not clear organization for Beats, you have to hunt to 'Filter' and then select 'Beats'.  It's early, but all of this needs to be addressed 

  • Reply 12 of 111
    How long until Beats HP Laptops are killed off?
  • Reply 13 of 111
    sog35 wrote: »
    explain.

    There a bunch of people who hate this deal for a simple fact that it caters to the urban/hip hop community.

    Please don't speak the truth about people when it makes them uncomfortable, you know you're gonna hear a million reasons why you're an idiot when you do that. (I tried before)
  • Reply 14 of 111
    mpantonempantone Posts: 1,375member
    Quote:
    Originally Posted by rulebreaker View Post



    How long until Beats HP Laptops are killed off?

    No one here knows since we haven't seen the terms of the licensing deal, not the original contract.

     

    Plus, we do not know HP's intent. They may wish to continue making Beats-branded notebooks through the duration of the existing contract. Alternatively, they may wish to terminate their involvement with the brand and not refresh their notebooks.

     

    You might be better off asking this question at an HP-focused Q&A forum. The readers there would likely have a better understanding of HP's management style and possible direction.

  • Reply 15 of 111
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    nope. People don't complain about Apple's headphones

    Related note:

    Apple headphones are now $14 on Amazon.  Regular price is $30.  Wonder if this is related.
    People don't complain about Apple's headphones? Are you f'ng serious?!? Also, last time I checked Apple's earpods were $29. The cheapest Beats headphones on Apple's store are $99.
  • Reply 16 of 111
    zoetmbzoetmb Posts: 2,437member
    Quote:

    Originally Posted by sog35 View Post

     

     

    nope. People don't complain about Apple's headphones


     

    If you're referring to the ear plugs which come with an iPhone, I never used those until recently, when my Sennheiser headset stopped working (they always eventually short out, due to poor plug construction and wires that are too small).   I was actually surprised as to how good they do sound.  Very crisp, clean high end, and if you stick them all the way in, even pretty decent tight bass, which isn't easy in an ear plug.  Quite the opposite sound of Beats headphones (haven't tried the in-ear), which sound muddy and unmusical, IMO.   

     

    The major problem I have with the Apple in-ear plugs is that they don't fit very well in my ears.   But if they made a lightweight, physically small headset, which had pretty much the same sound as the plugs with a bit better bass and were reasonably priced, I'd buy those. 

  • Reply 17 of 111
    rogifanrogifan Posts: 10,669member
    zoetmb wrote: »
    While that's true, the deal still deserves a critical eye because you have to wonder why Apple couldn't develop their own superior headphones (and streaming service) for far less than $3 billion.     And also because in spite of Beats' tremendous commercial success, anyone who knows anything about audio would tend to agree that the quality of the audio coming through their phones simply isn't very good.   

    IMO, getting Dr. Dre and Jimmy Iovine isn't enough of a reason.  It's not like urban youths aren't already using Apple products and this was a market they were missing and didn't know how to get.

    On the other hand, paying 2x revenue for a consumer products company is not excessive at all and Beats' 2013 revenue was $1.5 billion, which was quite impressive.    That means they probably sold about 10 million headphones in that year.   
    My guess is Iovine was pursuing Apple hard and Apple was able to justify it because the headphones make so much money. My biggest issue with the deal is it reinforces the haters meme that Apple products are overpriced inferior products that only sell because of slick design and marketing. Beats headphones aren't popular because they have the best sound quality, they're popular because Iovine and Dre were able to get well known musicians and athletes to wear them. If a young person sees their favorite rapper or basketball player wearing beats they're more likely to go out and buy a pair.
  • Reply 18 of 111
    MacProMacPro Posts: 18,165member
    sog35 wrote: »
    nope. People don't complain about Apple's headphones

    Related note:

    Apple headphones are now $14 on Amazon.  Regular price is $30.  Wonder if this is related.

    I have to confess I didn't even know Apple had their own headphones!

    Edit: Oh sorry, did you mean the buds? I wasn't being facetious, I just never looked as i use high end Pro cans for studio work and earbuds for poolside.
  • Reply 19 of 111
    andysolandysol Posts: 2,506member
    Quote:

    Originally Posted by sog35 View Post

     

     

    nope. People don't complain about Apple's headphones

     


    You mean the free ones that comes with the phone?  Ya- they're worth every penny I paid for them.

     

    Skull Candy sucks too.  Ignore that until I google to see if theres a black owner over there so I don't get labeled a racist.

  • Reply 20 of 111
    andysolandysol Posts: 2,506member
    Quote:
    Originally Posted by sog35 View Post

     

     

    Beats are about a combination of decent tech and style.

    Beats is more a designer brand than tech brand.

     

    If it was all about the tech than the professional brands would dominate.

     

    To make it into the mainstream for wearables you need style.  PERIOD.  No matter how good the product is the general population won't wear something if it looks goofy.


     

    Is it easier for Apple to create the best sounding headphone or the best designed?

     

    Would it not be easier to purchase a great headphone (that most people don't even know exists)- and make a style that appeals to the masses?

     

    No- they'd rather get a stylish headphone and then redesign the technical aspect to make it better.  Of course, now they'll have to hire engineers specifically focused for that, because both Apple and Beat's current offerings aren't technically excellent.

     

    The headphone purchase as a stand alone is a dumb acquisition.

     

     

     

    OR- we can just ignore the headphones- and just look at the marketing/talent acquisitions.  In this spectrum- they knocked it out of the park.

    They turned the headphone industry on its ear (pun intended).  And dominate the high-end market- even with an inferior product.

    Their celebrity marketing is extremely successful where others have failed (looking at you Blackberry).

    Their Beats Music deal has seen the best percentage of purchasers of any of the streaming music services.

     

    Regardless of how much overrated the headphones are, they are getting an infusion of extremely talented and fresh talent.

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