If you’re interested in tech news, it’s the story which has been almost impossible to miss over the last few weeks. Apple is reportedly planning on buying Beats, the headphone and music streaming service, for $3.2 bn. It’s news that has got people scratching their heads around the world; Beats headphones don’t have the best reviews and Apple already has iTunes, why would they want to buy a music streaming service when they control over 60% of the worlds digital music sales?
Well there are a few theories floating around. One theory is that Apple want to maintain their cool image, no matter how poorly people rate the Beats headphones, they are still seen by many as being a cool accessory. If Apple were to start branding the headphones they gave away with all of their portable devices with the Beats logo it would help maintain the image of the company. Although this is possible, it’s quite unlikely; the cheapest pair of Beats you can buy is £79.99, I doubt they would want to cheapen the brand by giving the headphones away as a freebie with a device.
Another theory is that Apple want Dr.Dre and Jimmy Iovine working for them so much, they are willing to spend $3.2 bn on acquiring their company. In a so-called acquihire, Apple would be acquiring the company for the sole reason of getting Dre and Iovine’s combined talent and vision into the Apple camp. This is fairly possible, Apple have been making some quite high profile hires recently, Angela Ahrendts (Burberry) and Paul Deneve (Yves Saint Laurent) to name just two.
One of the most plausible theories is that Apple want to run Beats Music, the music streaming service, alongside iTunes while it phases out music downloads and introduces a streaming only service. According to TechCrunch this morning, iTunes put roughly $1.02 bn into the music industry last year through media sales. The market is slowly shifting towards cloud based music streaming services (Spotify, Rdio) but sales through iTunes still pumps a mammoth amount of money into the industry. Apple don’t want to pull the plug on this money overnight though and it looks like they will be running Beats alongside their existing service until it gets to a level where they are making similar profits before phasing out the existing iTunes system.
Whatever the reason, the deal still isn’t complete and there’s every possibility of it not going ahead in the end (although it’s been billed as being about 70% likely), we’ll all be watching the space closely though I’m sure.