Apple’s Acquisition of Beats for $ 3.2 Billion Has a Reason
Since last morning tech columns and channels are abuzz with a takeover news. People are particularly elated with the fact that “Facebook” and “takeover” are not being said in the same sentence. Apple’s intention though is under serious questioning and there seems to be very few answers.
Beats headphones have quickly become the most visible brand across multiple medias. Especially the recent music videos have really gotten heavy on the “b” logo. But what does it mean for the company when one of the most creative corporations decides to spend $3.2 Billion on an audio equipment manufacturer who is currently valued at just $1 Billion.
Though the talks are still on and the deal could still be trashed, we try to comb through the noise to look at the facts as they stand now.
Apple has rarely invested in buyouts and takeovers. It mostly concentrates on getting technology from startups which helps it in its technological endeavors. It’s most recent purchase was of chipset manufacturer P A Semi, back in 2008 for their advanced chipset technology.
Beats on the other hand was a co-venture of Dr. Dre and legendary producer Jimmy Lovine back in 2008. The company recently took a $500 Million private equity firm Carlyle Group which took Beats’ present valuation at about $1 billion. This deal makes Dr.Dre the first billionaire rapper who could someday brag about his Spaceship in his rhymes. Which he totally deserves for giving humanity the gift called “Slim Shady”.
There is also a shadow loser in the game and it is HTC. The company even with its well appreciated products has recently been struggling keeping its market share. HTC owned half of Beats but sold all of its shares by September of last year.
The move also seems like Apple is putting its effort into creating some major hardware for the music industry, where the company has been prominent for a while with its iconic iPods. With the support from Dr. Dre and Jimmy Lovine, Apple may try to up its influence.
Steve Jobs had long emphasized that Apple’s greatest strengths lay in its software and in its ability to integrate hardware and software.
Beats had also released its music streaming service this January but it’s nothing the makers of iPod and iTunes can’t develop on their own. Also as the service is fairly new and area locked so it doesn’t have a massive consumer base like Whatsapp had when it was bought by Facebook.
It has also been contemplated that Apple would want to make profit in the non iPhone smartphone market. A healthy music equipment market seems like the right way forward.
So as of now between all the speculations the real intent of Apple behind such massive investment seems to be known only by Tim Cook’s men as of now. We just have to wait and see if this big step by Apple would bring next major leap in music industry or it will be a dud like the PowerMac Cube.
Late last night we got an “almost confirmation” by the Doctor himself, but we will still wait for the official announcement to confirm anything. You can absolutely feel the excitement in the air: It all starts with the words “Shit, the Forbes list just changed”.