It's a great move by Apple. They have more than $145 billion in cash reserves which puts the purchase price in perspective. Beats is not well regarded by audiophiles, but it is the dominate, most widely recognized, brand of upscale headphones. Coupling the iPhone/iPod with Beats headphones is a marketing juggernaut. Nearly as important is the Beats music service which will give Apple a platform to battle Spotify and Pandora. It's close to a can't miss proposition.
Apple to Acquire Beats Audio
The business wires are ablaze today with the story that Apple is acquiring Beats for $3B. Curiously, the press consensus (and pre-market reaction) is that it's a bad move for Apple, either because they're overpaying or because Beats' phones are poorly regarded (a curious stance, since Beats has 70% of the premium market). I disagree--$3B is bar change for Apple and Beats, I assume, is an exceptionally high-margin cash cow with tremendous brand cachet among consumers, if not audiophiles. I'm not personally sold on Beats streaming service, but I'd be surprised if it wasn't successful. Interesting move, in any event.
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Another way of looking at it is Apple is acquiring Jimmie Iovine. |