The rationale behind Apple's Beats buy

With the Beats deal, Apple gets a music industry mogul and a healthy peripherals business

Tags: Apple IncorporatedBeats Electronics ( and acquisitions
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The rationale behind Apple's Beats buy It's important to remember that Beats is much more than headphone brand
By  Tom Paye Published  May 29, 2014

If you haven't paid much attention to the news lately, Apple has agreed to acquire Beats Electronics and Music - the headphone brand and streaming service - for a cool $3bn. No doubt the deal will be labelled by many as a huge mistake, evidence that CEO Tim Cook has lost his way, but not by me.

When rumours surfaced a few weeks ago that Apple was looking to acquire Beats, many in the industry were left scratching their heads over the rationale behind the move. Would Apple become a parent company to another brand for the first time ever? And if so, why would it break the cycle of providing products not emblazoned with its famous logo? The deal made no sense, many proclaimed.

Now that the acquisition has been formally announced by Apple, however, it's much easier to see why Cupertino has taken such an interest in Beats.

First and foremost, it's important to remember that Beats is much more than headphone brand, as all too many forget. Beats Music, the streaming service, launched late last year as a competitor to the likes of Spotify and Pandora. And as of this month, it has around 250,000 subscribers.

And going on the acquisition announcement yesterday, it's clear that Beats Music is what really interests Apple. TechCrunch columnist MG Siegler explains why in this excellent blog post.

What's important is that Beats was co-founded by Jimmy Iovine, a music industry mogul. Indeed, Iovine was good friends with former Apple CEO Steve Jobs when he was still alive, and helped Apple a great deal with launch of iTunes.

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