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Apple Confirms Purchase of Beats For $3 Billion

Posted by Soulskill on from the throwing-down-the-big-money dept.

SimonTheSoundMan writes: "Apple has confirmed it will buy Beats Electronics and Beats Music for $3 billion. Apple will make the purchase using $2.6 billion in cash and $400 million in stock. An important part of the acquisition for Apple is absorbing the Beats subscription streaming service, even though it only has about 110k users. The Beats brand will remain intact, and will continue to sell headphones. "

30 of 188 comments (clear)

  1. I dislike Beats... by AcquaCow · · Score: 4, Funny

    ...but I appreciate what their marketing team has done for the rest of the headphone industry...

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    1. Re:I dislike Beats... by Farmer+Tim · · Score: 4, Interesting

      I think he means they make any other headphones look like high quality bargains by comparison.

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    2. Re:I dislike Beats... by scubamage · · Score: 3, Interesting

      They're really not that great. They're built for a single type of music (things that go thump). Try listening to something like an Opera or a Symphony and they'll quickly fall to shambles. They're unbalanced, there's no definition of sound, the soundstage is only decent on the low end, the frequency response is worse than you can find on most earbuds... they're pretty bad. And they're overpriced.

    3. Re:I dislike Beats... by scubamage · · Score: 2

      Wow, way to have a completely tangential conversation. Sorry if I pissed in your punch, but your generalizations about music tastes of the populace, and desires of the market while completely ignoring actual facts about the hardware make me pretty sure you need to reread what slashdot is - news for nerds. Some of us are audiophiles. Some of us are musicians. Some of us are sound techs. A lot of us DO care about those numbers on the back of the box, and what they translate to when you experience the music. I'd rather pay for balanced headphones which can listen to anything and sound incredible for a fraction of the price than pad some business man's pockets for selling a subpar product. But hey, keep justifying spending too much for an inferior product to yourself. No one is saying "I am superior because I buy a different brand than you," I'm saying that this product is inferior for a number of technical reasons. Please join the conversation that is actually going on, not the one you want to have. Thank you.

  2. Style over substance by AmiMoJo · · Score: 4, Insightful

    I think it's safe to assume Apple wanted the Beats brand and styling, since the technology is nothing special. Beats headphones sound shit compared to much cheaper competitors, so apparently the logo is worth billions.

    We seem to be in another bubble, where brand popularity is valued way too high.

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    1. Re:Style over substance by NoKaOi · · Score: 4, Interesting

      so apparently the logo is worth billions

      Well, isn't that the case with just about everything? Branding & perception. Ask your average purchaser what they think of Beats headphones and most of them will tell you they sound amazing and are totally worth the price. It's like Coke vs. Safeway Select cola. They taste exactly the same (not all brands taste the same, but in that particular case they do), but the store brand is 1/4 the price. Yet plenty of people still buy Coke when the store brand version is sitting in the same aisle. Now think of brand names in just about anything. What makes Beats any different? Do you seriously think quality matters more than branding perception to most consumers?

      And you're ignoring this part:

      An important part of the acquisition for Apple is absorbing the Beats subscription streaming service

      Not just the service, but more likely the licensing agreements.

    2. Re:Style over substance by nblender · · Score: 3, Informative

      I hadn't heard of Beats until last week. I was in a Future Shop (like Best Buy) with my son and he was all gaga over some of these Beats headphones on display... So I put them on and listened. It was like I was listening to music through a tin can while someone tapped on the can with a pencil... I'm far from a 'golden ear' audiophile wanker... I have a pair of mid-low end Sennheisers on my head 8 hours a day at work...

    3. Re:Style over substance by geekoid · · Score: 2

      unless they are blinded, and then that ability magically goes away.

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    4. Re:Style over substance by mythosaz · · Score: 4, Informative

      Sure. There's no questioning that, say, fountain Coke varies from location to location - McDonald's uses RO water, generally the same equipment, and a Coke there tastes different (and to me, better) than a fountain Coke at Burger King -- which purifies its water, but not RO. Also, apparently, a larger quantity of the water is kept chilled in their RO system (keeping it colder, allowing for better CO2 absorption).

      [A quick "McDonalds reverse osmosis" search shows a few articles that all say the same thing.]

      You can generally get a good Coke at your local Water and Ice store for similar reasons.

      Anyone living near Mexico can also tell the difference between a glass bottled Mexican Coke and the US version because of the sugar used.
      http://en.wikipedia.org/wiki/M...
      It used to be a treat at "real' Mexican restaurants here in the Southwest, but now they're available at Costco.
      [I personally avoid most sugared drinks, but indulge in the occasional "MexiCoke."]

      Regardless, Safeway Select Cola is in no way "exactly the same" as Coke :)

    5. Re:Style over substance by mjwx · · Score: 2, Informative

      I think it's safe to assume Apple wanted the Beats brand and styling, since the technology is nothing special. Beats headphones sound shit compared to much cheaper competitors, so apparently the logo is worth billions.

      You see Beats sells headphones with cheap hardware worth about $50 for around $300.
      Apple sells phones with cheap hardware worth about $100 for $600.

      Both utilise brand over performance, style over substance and both like to give their customers a good rodgering at every opportunity. It's a marriage made in corporate heaven.

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    6. Re:Style over substance by umdesch4 · · Score: 3, Interesting

      I'm surprised you're being modded flamebait. My first listen to the $299 version of Beats, I was certain they were actually broken. But no, I tried them at 3 different stores, and I can't for the life of my understand how they just don't sound downright bad to other people. They sound broken to me. The bass is cranked, but only in a very narrow range that makes certain notes in a bassline sound louder than others, and there's some weird kind of thing going on in the midrange that almost sounds like phase cancellation. I dunno man...

    7. Re:Style over substance by Bogtha · · Score: 2

      Apple sells phones with cheap hardware worth about $100 for $600.

      The $649 iPhone 5S costs Apple about $199 to build. And of course, that doesn't account for things like the cost of developing the software, or operating the servers that supply service to these devices.

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    8. Re:Style over substance by Gunboat_Diplomat · · Score: 2

      unless they are blinded, and then that ability magically goes away.

      Properly conducted double blind ABX tests are incredible insights into how perceptions influence our experiences. People who are just absolutely no questions about it convinced they have no problem whatsoever tasting or hearing a difference shockingly often lose that ability when they really don't know what they are tasting/listening to.

  3. Beats? BEATS? by mark_reh · · Score: 2, Interesting

    Why don't they just buy iHome while they're at it? Then they'll control 90% of the iCrap market.

  4. Apple has now jumped the shark by Spy+Handler · · Score: 2, Informative

    what exactly does Beats have that Apple can't come up with by itself in an afternoon? Hell they could get Eminem or some other rapper to endorse it for a lot less money.

    I used to be an Apple faithful but I think their days of innovation are past. Even Samsung is still trying to make its own shit like the VR goggles rather than just buy whatever seems popular.

    1. Re:Apple has now jumped the shark by Charliemopps · · Score: 4, Funny

      Hype.

      Apple used to be good at making it.
      Then Jobs died.
      Now they have to buy it.

    2. Re:Apple has now jumped the shark by YouGotTobeKidding · · Score: 2

      I can see why you posted AC - because you are a 'tard. Just look at the size of Sammy's patent portfolio and the amount they spend on RnD. Actually dont. It will blow your little apple fanboi mind. Not saying Samsung is above copying...but Apple has copied a shit ton more than Samsung.

    3. Re:Apple has now jumped the shark by zr · · Score: 2

      1. beats is a decent popular brand
      2. 100k streaming subscribers in one go
      3. two highly capable execs to handle day to day dealings with music industry
      4. eddie the stuff cue gets to go back to figuring out the cloud
      5. beats makes healthy profit, nothing to sneeze at

      looks like a very well calculated tactical move

    4. Re:Apple has now jumped the shark by sootman · · Score: 5, Interesting

      Wow. A 15-year climb from bankruptcy to the most valuable company in the world and people still look at every single move Apple makes and say "wow, that's fucking dumb." Isn't it just remotely possible that Tim Cook knows what the fuck he's doing, and that there's a good reason for buying Beats? How 'bout we give it a few weeks, huh? Maybe, just maybe, the guy running Apple knows something you don't, and perhaps we should give him the benefit of the doubt just this once and see how this plays out before passing judgement?

      Sorry, I must be new here.

      Besides: every move Apple makes doesn't have to be some earth-shaking road to an innovation unseen since the last amazing thing they did (which everyone shit all over at the time anyway.) If Apple buys Beats or Pepsi or Whirlpool or Nabisco or whoever for $3 billion and they make more than $3 billion off of that in the near future, then it was a good investment, right? Do you know what would make Beats worth $3 billion today? IF IT EARNS $5 BILLION IN THE NEXT FIVE YEARS. And oh, look, that's probably what will happen. (And note that Tim Cook probably has better financial info available than a year-old Fast Company article.) Maybe Tim looked at Dre's books and decided that with Apple's awesome buying power and manufacturing prowess that they could DOUBLE the profit of Beats OVERNIGHT. They might earn that money back by next Christmas.

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    5. Re:Apple has now jumped the shark by Jack+Griffin · · Score: 2

      Beats were a cool brand 5 years ago when they were new and had novelty value. Like most things in the fashion world they have already transitioned from edgy and unique, to every wannabe dork has them, and are hence now on the path to irrelevance. There is nowhere Beats can go from here other than down. Seems like a pretty poor move from Apple. But then they seem to be headed down that road too.

    6. Re:Apple has now jumped the shark by AmiMoJo · · Score: 2, Interesting

      The climb up was under Jobs' leadership. Cook's turn at the helm seems to be the slide back down again. It's slow, but it's happening. The magic is gone, and the products are no longer technically superior to the competition.

      It's already been long enough to see that. They ditched Jobs' "one true tablet size" pretty quickly. The iPhone 5/5s were both extremely "meh" and a year or two behind the competition. iOS 7 seems to have borrowed heavily from the flat look of Android and Windows, but still lacks basic stuff like widgets that make them great. Their in-car stuff is already eclipsed by MirrorLink and didn't generate much buzz when announced... Can you imagine how Jobs would have gone to town with that? Even the new Mac Pro was a bit of a damp squib once people realized that the GPUs were crippled versions of the full size cards.

      Sorry, but Apple has lost it's reality distortion field generator, and the field itself is collapsing. They could still turn it around, but at the moment they are reduced to producing misleading charts to pretend everything is going well.

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      const int one = 65536; (Silvermoon, Texture.cs)
      SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
  5. At last Dre has enough money to go back to school by Kenja · · Score: 4, Funny

    Now he can finish his Doctorate and stop living a lie!

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  6. Buying a streaming contract? by kinarduk · · Score: 5, Insightful

    I know apple have tried hard to get the labels to sign up to a music streaming service. Perhaps they bought beats because it already had a contract in place with the major labels, thus removing all of the complicated negotiations?

  7. Only in America by Ralph+Wiggam · · Score: 4, Interesting

    The DJ responsible for "Fuck Tha Police" just made a billion dollars. I love it.

    1. Re:Only in America by Monkey-Man2000 · · Score: 2

      The DJ responsible for "Fuck Tha Police" just made a billion dollars. I love it.

      Now he can write a song called "Fuck Tha [Apple] Shareholders"...

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  8. Re:Bubble of $23,600 per user by Stormwatch · · Score: 2

    As others have mentioned: it's not the users, it's not the shitty headphones -- Apple wants the licensing deals that Beats already has.

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  9. Price for new product?? by Eloking · · Score: 2

    Omg, two of the most overpriced brand fused together? Can't wait to see their new Beats+Apple headset for +1k$, everyone will love it.

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  10. Re:Beats Streaming Service has 110K Users? by R3d+M3rcury · · Score: 4, Interesting

    Actually, a co-worker brought up a good point.

    Apple had to go begging and pleading to the music labels to get permission to stream music and they probably got reamed. Supposedly, Beats Music has a kick-ass licensing deal with the labels--better than Spotify and Pandora. So now that's Apple's deal.

  11. Re:Beats Streaming Service has 110K Users? by Em+Adespoton · · Score: 2

    This is likely for the streaming agreements, so they can bolster their offerings on iTunes Radio. I doubt it has much to do with the headphones (hence why they're leaving that part of the business alone).

  12. Only 110K people who have figured out how to... by anyaristow · · Score: 4, Informative

    ...sign up.

    I tried to sign up for the streaming service today. I pressed the prominent "free trial" button, read the terms of service and privacy policy, and filled out the web form, only to be told "username not reserved." WTF does that mean? Temporary trouble? Hit the sign up button again...username not reserved. Picked a different user name. "Email not reserved."

    So, I read some of their support forum, where other people are asking, "wtf is username not reserved", and found you had to sign up through their mobile app before you can sign up for the free trial on their website.

    I checked again and found no instructions to that effect.

    Maybe there are only 110K people who have figured out how to sign up.