Friday, 09 May 2014 11:02

Apple to buy Beats: report


Reports are circulating that Apple is close to acquiring Beats Electronics, the headphone maker and operator of a streaming music service.

The Financial Times broke the story that Apple is looking to acquire Beats Electronics in a supposed US$3.2 billion deal, with confirmation coming from Bloomberg and other news outlets. Neither company has said a deal is pending.

The assumption is that the acquisition would bolster the iTunes service with a subscription option, but it's not clear why Apple couldn't negotiate suitable terms with the music labels if it really wanted to, and in the past there have been reports that some music deals contain language that terminate the licence in the event of a material change in ownership.

Beats Music currently costs US$9.99 per month.

While Beats headphones are widely distributed and appear popular, they do not always get the most favourable reviews - see, for example, 10 Headphones Better Than Beats.

The company's claim is that "Sound has been an afterthought for way too long. Our mission is to put an end to that. You deserve to hear your music the way the artist would play it back for you. And now, you can connect with them in a way you never imagined."

Beats audio technology is also used in certain HP products.

While the reported US$3.2 billion would be by far the most Apple has spent to acquire a company, that should be seen in the context of the almost US$19 billion it holds in cash and near cash, along with over US$130 billion in securities.

Earlier this year CEO Tim Cook told the Wall Street Journal "We have no problem spending ten figures for the right company that’s the right and that’s in the best interest of Apple in the long-term."

The question is not whether Apple can afford Beats, rather whether it would get value for money.

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Stephen Withers

Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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