Apple is not a company that regularly throws out billions to acquire other companies, so when rumors began to swirl around the web, claiming the Cupertino-based company flashed a massive $3.2 billion acquire Beats Electronics, confusion took over and we began to ponder what Apple has up its sleeve.
If the deal is real, and should it go through, it would be the largest acquisition Apple has ever done. This is a company that has never spent a billion dollars to acquire anything, despite the competition doing so on a regular basis. Apple's largest acquisition is the $429 million purchase of Next Computer back in 1996, the same company that brought Steve Jobs back to Cupertino.
The big question right now, is, what's the deal with acquiring Beats Electronics? The audio technology of this company is questionable, and if you know anything about audio, then you should know Beats is nothing special and that there are better headphones available at cheaper prices.
However, despite the inferiority of Beats headphones, these devices are quite popular among teens and celebrities. They cost around $300, which makes them quite expensive, but not even the high price-tag is stopping teens from going out and purchasing a new pair of beats, because the cool factor is high.
Now you should get an idea why Apple is willing to venture down this road. The company, in all its years, has failed to come up with a headphone that performs. With Beats, Apple would have a popular line of headphones that are loved by teens, a popular line of headphones that folks are willing spend $300 to own.
Hmmm, what about music streaming?
This could also be a reason for Apple to purchase Beats Electronics. So far, music streaming is rising in popularity, and Apple is behind considerably. Spotify, Xbox Music, Google Music and others, are experiencing success in this area, as many music lovers choose to pay for an unlimited streaming subscription rather than purchase albums or individual songs.
Beats has its own streaming platform, but it is new to the game and would likely take a long time to make a name for itself in this field. However, with Beats brand popularity and Apple's extensive experience in selling music, the two combined could bring forth a streaming platform with the ability to rival competing services.
At the end of the day though, the main reason behind this deal, if it goes through, could be how popular Beats is with young people and celebrities. Product inferiority aside, Apple could use the power of the Beats brand to push forward new services, along with getting a boost in headphone and music streaming business.
Should this deal happen, Dr. Dre, who has around 25 percent shares in Beats, would end up being the richest man in Hip Hop, according to a report from Forbes.
