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Wednesday, May 28, 2014

Apple purchases Beats Music and Beats Electronics for a sum of $3 billion


Apple purchases Beats Music and Beats Electronics

Apple has (finally) made an official announcement that it will be purchasing Beats Audio for a sum of $3 billion. This is the largest purchase that Apple has made in its history, and represents a significant amount of the company's $160 billion value. 

Apple is purchasing both the Beats Music and Beats Electronics, for a purchase price of approximately $2.6 billion, with the remaining $400 million to vest over time. Apple CEO Tim Cook said that Beats Audio's co-founders, Jimmy Iovine and Dr. Dre, will be spending more time in Silicon Valley, working for Apple and that the Beats brand will remain intact.
"This is a big deal. But to put it in some perspective, we acquired 15 companies last year and 12 this year, some 27 in 18 months. But this one is all about music, which we've always felt is in our veins and we've always appreciated that technology alone was not enough."-Tim Cook, CEO, Apple
This purchase makes it clear that Apple is looking for an alternative to its pay-per-song option currently offered on iTunes. With the purchase of Beats Music, Apple could be planning to switch to charging users a monthly sum for access to their music content.

Now many of you may be wondering why Apple is paying so much for Beats Music, when it had just 111,000 paying subscribers in March. However the headphone division is said to bring in over $1 billion in revenue, which is likely the incentive that Apple hopes to take advantage of until the streaming music side of the company begins to perform.

What do you think of Apple's purchase of Beats Audio? Feel free to sound your thoughts in the comments section


source - USAToday | BeatsMusic
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