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From left to right: Jimmy Iovine, Tim Cook, Dr. Dre, and Eddy Cue  (Source: Apple)
Deal is slightly less than the $3.2 billion originally reported

The unlikely pairing that was first reported two weeks ago has come to fruition: Apple is buying Beats Electronics for $3 billion. The $3 billion valuation comes just slightly under the $3.2 billion figure that was first thrown around on May 8 due to the fact that, “Apple hadn’t even begun its due diligence process when news of the number came out,” according to the New York Post.

The deal consists of a purchase price of $2.6 billion, and $400 million in stock options according to Apple.
 
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Apple CEO Tim Cook in a company press release. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”

In a followup interview with Re/code, Cook added, “We could build about anything that you could dream of. But that’s not the question. The thing that Beats provides us is a headstart, and it provides us with incredible people, kindred spirits.”

In an interview with the New York Times, Cook continued, lavishing praise on Iovine and Dr. Dre, proclaiming that “these guys are really unique” and are “going to be coming up with ways of features that blow your mind.” Cook also envisioned that the pair would be able “to articulate the way to take music to an even higher level than it is now.”


Jimmy Iovine (L) and Dr. Dre (R) [Image Source: Time Magazine]

Beats co-founders Jimmy Iovine and Andre Young -- better known as Dr. Dre -- will both join Apple in some fashion (their exact roles haven’t been disclosed at this time). According to the Wall Street Journal, their titles will simply be "Jimmy and Dre."

“I’ve always known in my heart that Beats belonged with Apple,” said Iovine. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”


The latest, rather large (by Apple standards) acquisition will not only give Apple access to Beats’ extremely popular lineup of in-ear headphones, on-ear headphones, and portable speakers, but also its streaming music service. “The addition of Beats will make our music lineup even better,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services. “From free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years.”

Apple expects the deal to close by the end of 2014 following regulatory approval.

For more perspective on the deal, 9to5 Mac has posted Tim Cook's letter to employees regarding the acquisition:

Team,
 
This afternoon we announced that Apple is acquiring Beats Music and Beats Electronics, two fast-growing businesses which complement our product line and will help extend the Apple ecosystem in the future. Bringing our companies together paves the way for amazing developments which our customers will love.
 
Music is an important part of our lives and our culture. Music has the power to inspire us, to comfort us, and to send our emotions soaring. It brings people together and transcends the limits of spoken language.
 
Apple’s history in music began with selling Macs to musicians. That remains important to us today, but we also bring music to hundreds of millions of customers with iTunes, which is at the forefront of the digital music revolution. Music holds a special place in our hearts at Apple, and we know that we can make an even bigger contribution to something that is so important to our society. That’s why we have kept investing in music and why we’re bringing together these extraordinary teams — so we can continue to create the most innovative music products and services in the world.
 
Beats co-founders and music industry pioneers Jimmy Iovine and Dr. Dre will join Apple, along with their team of employees. Jimmy has been on the cutting edge of innovation in the music industry for decades, including as a key partner for Apple in the launch of the iTunes Music Store more than ten years ago. He has produced or collaborated with some of the most popular artists in history, and been an important contributor to the success of the iTunes Store.
 
Beats Music was built with deep respect for both artists and fans. We think it’s the first subscription service to really get it right. Both Apple and Beats believe that a great music service requires a strong editorial and curation team, and we will continue to expand what we do in those areas. The addition of Beats will make our incredible iTunes lineup even better, extending the emotional connection our customers have with music.
 
The Beats Music team will report to Eddy. The teams will be getting to know each other better in the weeks ahead, and we are very excited about the possibilities for the future.
 
Beats Electronics has become the brand of choice for headphones and speakers in both the music and sports world, just five years after its launch. They are among the most popular and highest-rated third-party products sold today in Apple’s retail and online stores. We see an incredible opportunity to bring Apple’s legendary design and engineering capabilities to these popular products under Phil’s leadership.
 
Please join me in welcoming Beats to Apple. I hope you are as excited as I am about this new chapter in our history.
 
Tim

Sources: Apple, Re/code, New York Times



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Okay...
By Dorkyman on 5/28/2014 4:46:19 PM , Rating: 5
Whatever, but I don't think Jobs would have done this.




RE: Okay...
By rbuszka on 5/28/2014 4:53:55 PM , Rating: 5
Agreed, Jobs understood high-end audio. He owned magneplanars and built Harman-Kardon audio into the second generation iMacs and many of the clear-plastic models that were made. He never would have aligned with Beats Audio, which is the commoditization of audio as a status symbol or jewelry. When you put on a pair of beats headphones, you say to the world, "I'm tuning you out", not "I understand the importance of quality audio in the appreciation of music."


RE: Okay...
By MScrip on 5/28/2014 5:10:51 PM , Rating: 2
quote:

... audio as a status symbol or jewelry

Funny... Apple's white earbuds were an amazing piece of jewelry. Marketing genius.

The decision to make white-corded earphones was one of Apple's best ideas ever.

Do you think it was by accident that they shipped hundreds of millions of white earbuds? Did they simply run out of black cord? :)


RE: Okay...
By tayb on 5/28/2014 5:13:46 PM , Rating: 5
I'm not sure. What other company comes to mind when I say "overpriced with a strong brand following."

Apple. These two are a perfect fit.

Honestly, the Beats Dr. Dre Executive are reviewed favorably. They aren't the top of the line and certainly aren't the best value but they do sound great. The cheaper models aren't even worth considering but most people who buy these headphones buy them for the status symbol and the audio quality is secondary. Again, what other company does that sound like??


RE: Okay...
By JasonMick (blog) on 5/28/2014 5:49:59 PM , Rating: 2
quote:
I'm not sure. What other company comes to mind when I say "overpriced with a strong brand following."

Apple. These two are a perfect fit.

Honestly, the Beats Dr. Dre Executive are reviewed favorably. They aren't the top of the line and certainly aren't the best value but they do sound great. The cheaper models aren't even worth considering but most people who buy these headphones buy them for the status symbol and the audio quality is secondary. Again, what other company does that sound like??
Agreed. The two are a natural fit.

Best case scenario for Apple imho is for Tim Cook to get the boot and for Dr. Dre to become CEO. It sounds outlandish and laughable, but the more you think of it, Dr. Dre is a good salesman and very public/flashy. In that regard he's much closer to Steve Jobs than Tim Cook will ever be.

Tim Cook is slowly killing Apple. But if investors realize in time, someone who's a great salesman like Dre could reexcite customers and restore profit growth.


RE: Okay...
By Reclaimer77 on 5/28/14, Rating: -1
RE: Okay...
By JasonMick (blog) on 5/28/2014 6:13:32 PM , Rating: 3
True, but I think Phil Schiller would be able to handle a lot of the technical details... I think he is being seriously held back by Cook. The recent Samsung case disclosures strong indicated that he has been fighting with Cook and others to make the moves Android is making -- cheaper devices, larger screens, while keeping Apple's commitment to hardware and high quality designs.

(To be clear, I mean "high quality" in the sense of it being tightly packaged and with an appealing design, which typically hurts durability, but enhances eye appeal.)

Dre + Schiller, combined might sort of equate to what Steve Jobs was all by himself. He was a bit crazy and egomaniacal (okay a LOT) but you'd be hard pressed to find someone who was the pitchman Jobs was or the master of creating polished products he was, let alone both.

I've seen little to indicate Mr. Cook is very good at either, so at this point Apple -- while doing terrific coasting on the coattails of Jobs' success -- would benefit from any shift towards a better pitchman or product visionary.


RE: Okay...
By HoosierEngineer5 on 5/29/2014 9:23:32 AM , Rating: 2
So, you are saying Mr. Cook realizes Apple needs a personality (or two) to be the Cult Leader after Jobs?

Interesting...


RE: Okay...
By flyingpants1 on 5/28/2014 10:48:27 PM , Rating: 3
Just wondering, what makes you think Dr. Dre has a low IQ?


RE: Okay...
By Spuke on 5/28/2014 11:00:58 PM , Rating: 3
quote:
Just wondering, what makes you think Dr. Dre has a low IQ?
Typically folks who don't like hip hop/rap always have something demeaning to say about it. What I think is funny is how people outside the music industry think it's all divided up according to their own musical tastes (LOL!). Reality is FAAARRRRR from that.


RE: Okay...
By ProZach on 5/29/2014 9:37:24 PM , Rating: 2
I read flying's comment that Jobs had a low IQ but had a big influence on people- much like Stalin I suppose. Lol.

In that case, Dre is still a far cry from Jobs but still a better figurehead than Cook.

<offtopic> I like headphones that have a removable cord but I won't buy them if they're made by Beats or Rosewill :P </offtopic>


RE: Okay...
By tonyswash on 5/28/2014 8:58:12 PM , Rating: 2
quote:
est case scenario for Apple imho is for Tim Cook to get the boot and for Dr. Dre to become CEO. It sounds outlandish and laughable


That’s because it is outlandish and laughable, downright silly actually. I agree that Tim Cook’s presentation style is pretty wooden compared to Steve Jobs, although you could say the same about most tech CEOs, but keynote presentations are a tiny fraction of what a CEO does. I have wondered if some of the recent new hires (including Iovine but also perhaps including Angela Ahrendts the very important new head of Apple retail) would carry more of the keynote and product launch presentations along with stalwarts of Schiller and Federighi. The biggest loss at Apple with the death of Steve Jobs was in communications, nobody could pitch like him. The main product Jobs worked on in the decade before his death was of course Apple itself and he seems to have done a pretty good job crafting his creation in his image.

Interesting that they didn’t save the official Beats announcement for Monday's WWDC keynote, there are rumors (which as always should be taken with a pinch of salt) of some big stuff being announced so maybe they didn’t want any room on the day to squeeze something else in.


RE: Okay...
By Acupuncture on 5/29/2014 5:01:05 PM , Rating: 2
Dude you are absolutely insane, and obviously have no idea how to run a company. Apple is trading above $630 and hasn't even introduced a new product category since Steve Jobs died. Once again you will eat crow when the stock goes above $700, and the iWatch, larger iPad and iPhone sell off the charts. Stick to writing blogs and opinion pieces. ; )


RE: Okay...
By Manch on 5/29/2014 5:25:01 PM , Rating: 2
Isnt that what he is doing? providing his opinion?


RE: Okay...
By Acupuncture on 5/29/2014 6:06:32 PM , Rating: 3
Absolutely, but his opinion is generally a form of comic relief.


RE: Okay...
By croc on 5/29/2014 1:03:35 AM , Rating: 2
Uh... Bose? And to get the best sound, Monster Cables?


RE: Okay...
By Joz on 6/3/2014 12:05:46 PM , Rating: 2
Monster Cables, really?

Oh dear Satan, send your workers to educate this person with fire and brimstone.


RE: Okay...
By Drafter on 5/29/2014 2:13:11 AM , Rating: 2
I agree. Beats is overpriced boutique electronics for the trendy tech-illiterate masses just like most Apple products. I look at it as a company spending 3 billion dollars to buy another company to reinforce its negative brand image. Now if they had purchased Shure's headphone division or Etymonic, that would have been a more serious move.


RE: Okay...
By tonyswash on 5/29/2014 7:53:33 AM , Rating: 1
quote:
I agree. Beats is overpriced boutique electronics for the trendy tech-illiterate masses just like most Apple products. I look at it as a company spending 3 billion dollars to buy another company to reinforce its negative brand image. Now if they had purchased Shure's headphone division or Etymonic, that would have been a more serious move.


Worth saying this again because it's obviously not sunk in. This is not about the hardware. It's about strategic music business connections. Do you know how powerful Irvine is in the music and entertainment biz? It's almost certainly about skating to where the (music) puck is going to be.


RE: Okay...
By degobah77 on 5/30/2014 11:43:46 PM , Rating: 1
Do you realize that most of Iovine's work is pure mainstream bullshit and doesn't display any quality other than the ability to suck money out of the pockets of mindless consumers?

You may be right but you have the wrong reasons. The dude is a complete douchebag, so therefore a perfect fit for Apple.


RE: Okay...
By Fujikoma on 5/28/2014 5:23:19 PM , Rating: 3
High end audio... hahahahaha!!!
Apple used Bose for its 20th anniversary Mac in the late 90's and Bose is hardly high end. I wouldn't place Harmon Kardon in the high end category either. I like some of their products, but they're still a mid-level consumer electronics seller.


RE: Okay...
By tonyswash on 5/28/2014 7:07:41 PM , Rating: 1
quote:
Agreed, Jobs understood high-end audio. He owned magneplanars and built Harman-Kardon audio into the second generation iMacs and many of the clear-plastic models that were made. He never would have aligned with Beats Audio, which is the commoditization of audio as a status symbol or jewelry.


Do you really think this deal is about headphones?


RE: Okay...
By mondo1234 on 5/28/2014 7:23:17 PM , Rating: 3
quote:
Do you really think this deal is about headphones?


Not sure what you are talking about, but I do know that this gives Apple Streaming Music on Android and WP with cross platform apps to match. Other than that, they get industry insiders that are better at negotiations than Eddie Cue.


RE: Okay...
By tonyswash on 5/28/2014 8:41:10 PM , Rating: 1
quote:
that are better at negotiations than Eddie Cue.


Agreed Apple just hired one of the most powerful people in the entertainment industry but you seem to imply that Eddie Cue lacks negotiation skills which is certainly not what his reputation in the tech industry says. Eddie Cue pretty much led most of Apple negotiations with content providers/owners which have resulted in Apple having the broadest and richest content ecosystem in the business.


RE: Okay...
By Spuke on 5/28/2014 11:07:15 PM , Rating: 1
quote:
which have resulted in Apple having the broadest and richest content ecosystem in the business.
I was with ya till this. LOL! Such shill.


RE: Okay...
By tonyswash on 5/29/2014 5:35:49 AM , Rating: 2
quote:
I was with ya till this. LOL! Such shill.


What I said is simply true, it's not hyperbole and it's not a particularly controversial thing to say, it just factual. And it's the result of the work Cue has done over the years.


RE: Okay...
By Spuke on 5/29/2014 4:57:59 PM , Rating: 2
Yeah ok shill.


RE: Okay...
By Motoman on 5/28/2014 5:36:54 PM , Rating: 5
On the contrary, Beats is the perfect corollary for Apple in the audio market. As is Bose, and Monster Cable.

Now that Apple has sucked up Beats, they should totally go after Bose and Monster Cable too. Maybe they could cluster all their products together in the stores, and make it that much easier for the clueless dipsh1ts of this world to find the products they're looking for.


RE: Okay...
By tayb on 5/28/2014 5:49:21 PM , Rating: 2
RE: Okay...
By Spuke on 5/28/2014 11:20:01 PM , Rating: 2
The taker gets took. Sounds good to me.


RE: Okay...
By Solandri on 5/28/2014 5:50:20 PM , Rating: 2
quote:
Now that Apple has sucked up Beats, they should totally go after Bose and Monster Cable too. Maybe they could cluster all their products together in the stores, and make it that much easier for the clueless dipsh1ts of this world to find the products they're looking for.

Actually, the converse would be more valuable. If Beats, Bose, and Monster Cable products were Apple exclusives, it would make it a lot easier for the clued-in to avoid them: Just don't buy Apple products.

I'm really curious where exactly they're going to use Beats audio in their product line. The Macbooks and iPods are used in a lot of music production workflows. When producing music, you need flat, neutral reproduction. Beats does not give you that. Implement it in the Macbooks and you basically ruin the Macs for music production. Even an on option to switch it off still carries with it the risk that someone producing a master recording may forget to flip the switch.


RE: Okay...
By Motoman on 5/28/2014 5:53:55 PM , Rating: 2
I wouldn't assume they're really going to "use" Beats in their traditional products at all - other than to maybe bundle Beats earphones with your new iPoop.

Realistically it would be perfectly reasonable for them to continue Beats as a wholly-owned subsidiary, and continue to do their own thing. Clearly Beats isn't having any trouble separating fools from their money in the audio market - just the way Apple does in their traditional markets. So why mess with that?


RE: Okay...
By Solandri on 5/29/2014 6:52:09 AM , Rating: 2
They didn't do that with Authentec though (they made fingerprint scanners, mostly for laptops). After Apple bought them, they shut down all sales to other vendors, deleted the existing website and drivers, put up a "final driver update" for 4 months before deleting those too, and basically screwed over everyone who had an Authentec device in their hardware. All so they could make it an Apple-exclusive feature.

My laptop is one of those affected. I've been meaning to reinstall a fresh copy of Win 7, but doing so now would mean I'd be stuck with the original fingerprint scanner drivers which shipped with the laptop. I assumed the "final" drivers would be available from the website forever, like every responsible company does. So i didn't download a copy during that 4 month window, figuring I could download it later when I reinstalled.


RE: Okay...
By Motoman on 5/29/2014 6:21:30 PM , Rating: 2
Yes but those scanners weren't consumer products in and of themselves. I can't see any way that Apple won't continue Beats as it's own product line...although granted they may not allow other PC vendors to use Beats licensing on anything, like HP. Not like you should care - they're the same $.50 paper Chinese speakers either way ;)


RE: Okay...
By WldAntc on 5/28/2014 8:35:54 PM , Rating: 2
quote:
and make it that much easier for the clueless dipsh1ts of this world to find the products they're looking for.

*to be told the products they are looking for.

-iBaaaaa


Guess Dr. Dre drunken outbursts cost him $200 million
By tayb on 5/28/2014 5:03:26 PM , Rating: 2
Deal was reportedly $3.2 billion, Dr. Dre gets drunk and brags about the deal in a night club, deal is reportedly "in limbo", and then the final number is $3 billion.

Sounds like Dr. Dre's drunken outbursts cost him a cool $200 million.




By Brandon Hill (blog) on 5/28/2014 5:14:57 PM , Rating: 2
Source for those that haven't already seen it:

https://www.youtube.com/watch?v=guMFKBXp544


By JasonMick (blog) on 5/28/2014 5:53:56 PM , Rating: 2
Interesting, but when you have at least a billion dollars (which Dre likely does) why care about $200M USD??

While obviously from wildly different backgrounds, Dre's confidence echoes Steves Jobs. Both might be screwed over at times from their arrogance and braggadocio, but if I was a shareholder I'd take that any day over Tim Cook's quiet, passive aggressive form of leadership. Confidence sells.


By Makaveli on 5/29/2014 9:58:58 AM , Rating: 2
Dr dre networth was not 1 billion dollar before this deal it was closer to 500 million.


By Spuke on 5/29/2014 5:00:19 PM , Rating: 2
quote:
Dr dre networth was not 1 billion dollar before this deal it was closer to 500 million.
Poor broke bastard.


By Cheesew1z69 on 5/28/2014 9:25:09 PM , Rating: 2
Or, it was a assumption of the price by the media.


By The Von Matrices on 5/28/2014 11:04:03 PM , Rating: 2
Or someone is just rounding off $3.2 billion to $3 billion.


By Spuke on 5/28/2014 11:25:52 PM , Rating: 4
quote:
Sounds like Dr. Dre's drunken outbursts cost him a cool $200 million.
Who gives a f#$k, the man sold a headphone company for 3 BILLION USD !. Let me know the next time you accomplish that task so we can critique the particulars of your deal.


BEATS are junk
By SPOOOK on 5/28/2014 11:51:44 PM , Rating: 2
I had beats they were the worst headphones I ever had the ear pads fell apart after 1year I contacted the company about replacing them they never responded to any emails for the broken ear pads the consumer service is garbage the worst I ever had and the sound is junk these beats were rated
the worst headphones ever tested and over priced they derive apple for overpriced junk




RE: BEATS are junk
By Reclaimer77 on 5/29/2014 12:28:03 AM , Rating: 2
Looks like they're garbage.

http://www.ifans.com/blog/84393/

So Apple, the company with more in the bank than god, spends billions on a crap brand.

Apple, the company people swear is synonymous with "quality".



RE: BEATS are junk
By Acupuncture on 5/29/2014 6:38:13 PM , Rating: 2
The brand has a lot of staying power, and Iovine alone will grant Apple the power to do just about anything within the music industry. You are being extremely short sighted.


By PandaBear on 5/28/2014 6:02:49 PM , Rating: 2
The MOG music model may worth something, the headphones, not, because anyone that wants to build them can build them.

But the most important thing to buy is about a next Steve Jobs replacement, and if Iovine can sell a headphone to suckers for this kind of premium, then he is a good replacement.

Dr Dre, maybe the bling market and he will run the Beat brand.




Look At That Stock Go!
By Acupuncture on 5/29/2014 3:44:32 PM , Rating: 2
Oh yea, Apple is up over $630! Wohoooo $$$$$$$




choke on it Beats
By BillyBatson on 5/29/2014 5:25:50 PM , Rating: 2
Worst purchase ever. One of the worst over priced audio companies out there. I hope Apple chokes on their Beats purchase and spits them out with a bad taste in its mouth.




By Any14Tee on 5/31/2014 10:17:52 AM , Rating: 2
There are parallels with the two toy makers, its the hipsters dream. I was so overwhelmed with the news I had to go to the toilet and wank ha!
Yeah two masters of market branding declare their love, they deserve each other.

My very expensive Beats ear plugs clouded my hearing and the marketing intoxicated my judgement, until I liberated my ears from the shackles, until that is I listened to music through the AKG headphones. Oh God, the audio integrity shined through, the timber and texture of the music had weight and presence. I couldn't help it I pissed myself.
Anyway I hope Apple and Dr Dre long continue to bulls**t.




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