Apple buys Beats

Zcott

After a lot of rumour, they've finally announced it. Hopefully we'll see an Apple streaming service soon...

DubDJ

Doubt it, they've said they'll keep both companies seperate, and have iTunes Radio and the Beats streaming services running side by side.

Frank Lee Midere

DubDJ wrote: »

Doubt it, they've said they'll keep both companies seperate, and have iTunes Radio and the Beats streaming services running side by side.

Did they? You sure ?

DubDJ

Frank Lee Midere wrote: »

Did they? You sure ?

Yeah, they're also allowing the Windows and Android app from Beats to stay online, it's possible they could merge both services but for now they're keeping them seperate. See the exact quotes below,

Apple CEO Tim Cook has conducted several interviews with various news organisations about the deal, revealing some interesting tidbits. The press release noted that Apple will keep Beats around as a separate brand, including Beats’ hardware. Most notably, however, Cook told the Financial Times that Apple will not remove the Beats app from competing app stores on Android and Windows Phone.

The Financial Times also confirmed that Apple will keep Beats’ subscription service and iTunes Radio separate entities, at least for the time being.

All from 9to5Mac

squonk

It really begs the question as to Why? now? I assumed the reason for the buyout was more about the streaming music service than the headphones. If they're running the company as a separate concern then what's the point? Apple already make headphones.

Dudda

squonk wrote: »

It really begs the question as to Why? now? I assumed the reason for the buyout was more about the streaming music service than the headphones. If they're running the company as a separate concern then what's the point? Apple already make headphones.

Along with the music streaming and headphones there's another future issue.

Think wearable tech. A lot of people don't like the look of Google glasses. If apple could incorporate some tech like a microphone into the headphones you could reply to emails, messages etc, or have them read out to you via siri through the headphones. The possibilities of Google Glass are huge but they have an image problem. Beats don't have that wearable image problem.

DubDJ

squonk wrote: »

It really begs the question as to Why? now? I assumed the reason for the buyout was more about the streaming music service than the headphones. If they're running the company as a separate concern then what's the point? Apple already make headphones.

Cash! Over 1 billion in revenues last year to be precise. As Beats supposedly cost very little to make there's probably a lot of profit from that too.

The streaming service will definitely be a big part of it to Apple. Also they might get a few important connections via Iovine. Other than that both companies are pretty similar, both iconic brands with a huge focus on the premium market. Despite the bad press Beats get over sounding terrible, they really don't. They're not the best sounding headphones but they're pretty good, albeit over priced. They are well built and look nice for the most part too. In the short term it's a streaming service and steady source of revenue for Apple.

FourFourRED

squonk wrote: »

It really begs the question as to Why? now? I assumed the reason for the buyout was more about the streaming music service than the headphones. If they're running the company as a separate concern then what's the point? Apple already make headphones.

Apple don't make headphones.

They may be keeping the subscription service seperate for now but ultimately Apple will be using their knowledge in the area to eventually bring a Spotify competitor to the market led by Iovine & Dre. iTunes Radio isn't in the same domain as Spotify/Beats music and iTunes is in decline. So in my opinion Beats music will change in time to an Apple exclusive service when they get the mix right.

As for the headphones, they're already heavily pushed in the Apple stores and online so having that little bit more control over them and keeping the margins they make on them will be beneficial & they are buying into a working brand + aquiring the people who made it work.

We can't forget that Apple had a very big share of the music sales over the last number of years and if aquiring Beats will help them gain back share lost to streaming services, it could work out to be a good deal. I'm sure Apple have done their due dilligence on this one.

Zcott

Apparently Beats has transferable rights to the songs on it's streaming service, so Apple will apparently have those rights to stream those songs now. I'd say that's a big part of the decision. Much easier to buy rights than to do deals, it seems.

FourFourRED

This explains things quite well

http://mobile.theverge.com/2014/5/29/5760886/why-apple-needed-beats-as-music-downloads-dwindle-streaming-is-the

Zcott

Yep, that makes sense. I've held off subscribing to Spotify for a while but I could be tempted to subscribe to an Apple streaming service.

SpaceTime

I really like Spotify and I would definitely say that I haven't really bought anything on iTunes since I subscribed.

It's no wonder Apple's running scared, particularly with Google Music also being available widely too.

Duff

Can't really see myself leaving Spotify tbh. There really is no need for iTunes on the phone with it.

The J Stands for Jay

iTunes is a horrible mess and who buys mp3s these days? Beats brand fits well with Apple's, style over function. And besides, that cash pile couldn't have been going down well with investors.

FourFourRED

McGaggs wrote: »

iTunes is a horrible mess and who buys mp3s these days? Beats brand fits well with Apple's, style over function. And besides, that cash pile couldn't have been going down well with investors.

Yep stock price has been rising nicely since the rumours & final announcement. Back at a healthy $635 now.

Mimikyu

This post has been deleted.

DubDJ

McGaggs wrote: »

iTunes is a horrible mess and who buys mp3s these days? Beats brand fits well with Apple's, style over function. And besides, that cash pile couldn't have been going down well with investors.

The problem with streaming is your only renting the music, and if you decide to not pay for spotify or lose signal and have no tracks stored locally then your without your music. I have spotify a few months but rarely use it but I listen to my iTunes library daily and just purchased a few albums and singles this month. I've probably used iTunes more this week than I have with Spotify since I've downloaded it.

Also if you think products like the Mac Pro, iPhone and MacBooks aren't functional your using them wrong. They also look great which is why they're so popular, certainly not style over function.

Mimikyu

This post has been deleted.

DubDJ

Captain Morgan wrote: »

This post has been deleted.

Yeah for me I'd re-listen to a lot of old stuff as well as buy stuff a lot less. So €10 would be wasted for me, some months I'd spend more than that and others a lot less.

iniall

SpaceTime wrote: »

I really like Spotify and I would definitely say that I haven't really bought anything on iTunes since I subscribed.

It's no wonder Apple's running scared, particularly with Google Music also being available widely too.

Apple is running scared? Really? Where's your evidence for this? Is it because you haven't bought anything on iTunes for a while?

Creamy Goodness

Beats give more back to the artist. Also it's human curated as opposed to algorithms. Iovine's a real important music industry head and will be a huge asset to apple.

This is tim cook's apple now. Nothing should come as a surprise.

On the headphone front beats today are what white EarPods were back in 2001, a status symbol, a must have.

Dman001

I don't know why Apple would want to get into the subscription music business. No one in the market is making any money from it, and have yet to discover how to make substantial money from it. On top of that, the market is almost becoming saturated with similar services who are more established than Beats. While Eddy Cue did give the explanation that 'Music is in Apple's DNA', but the market has changed significantly from the iPod days. iTunes started off as a way to offer a competitive advantage over other MP3 Players on the market at the time. Now we have the explosion of Apps and the likes of Spotify on multiple platforms including iOS. It doesn't seem like a necessary purchase to me.

Unless their plan was to move into the Wearables market, but I'm not convinced that Apple wouldn't have been able to do this on their own.

The J Stands for Jay

DubDJ wrote: »

The problem with streaming is you're only renting the music.

No, you still don't really own downloads: http://www.cnet.com/uk/news/who-owns-your-downloaded-music-after-you-die/

DubDJ wrote: »

They also look great which is why they're so popular, certainly not style over function.

LOL

DubDJ

McGaggs wrote: »

No, you still don't really own downloads: http://www.cnet.com/uk/news/who-owns-your-downloaded-music-after-you-die/




LOL

Completely off point, I'm talking about owning a physical copy of the file which I can always have available to listen to, not who owns the rights after I'm dead.

'LOL' ??? Really? Great selective quoting from you too, but that doesn't backup your point, the fact most business uses iPhone's and iPads over the competition shows how efficient and 'functional' they are.

Zcott

Back roughly on topic. How long before you can buy an iPod that comes with, say, a year's subscription to an Apple streaming service?

The idea of buying a piece of hardware that has access to every single song preloaded on it sounds extremely appealing...

Doodah7

I think the more interesting part of this deal is what Apple actually spent their $3 billion on. It seems that $2.5 billion was for the headphones side and $500 million for the streaming service. This makes a lot more sense. The headphone Division turns over more than $1 billion per annum and therefore Apple will make their money back on this investment relatively quickly.

The $500 million for streaming is also relatively cheap considering if Apple had to start from scratch...

The J Stands for Jay

DubDJ wrote: »

the fact most business uses iPhone's and iPads over the competition shows how efficient and 'functional' they are.

My employer uses Nexus tablets internally, but Sales are given iPads because it impresses the customers.

Streaming sets out your rights quite simply, you rent the song for one listen. When you buy a digital download, your rights are less clear. There have been cases of providers remotely deleting purchased files from users accounts. Also, you don't have the right to use the file as you see fit, there are restrictions on burning and transferring files (all mentioned in my previous link).

fifth

Creamy Goodness wrote: »

Beats give more back to the artist. Also it's human curated as opposed to algorithms. Iovine's a real important music industry head and will be a huge asset to apple.

This is tim cook's apple now. Nothing should come as a surprise.

On the headphone front beats today are what white EarPods were back in 2001, a status symbol, a must have.

This..

It's nothing to do with wearable tech and brand image. Apple have the best industrial design team in the world, with an amazing marketing department to boot. These areas are not problems for them right now.

It's most likely for:

1) the streaming service - beats took an interesting approach with their service in that it strives to be intelligent and wants to learn from you & be much better at recommending music than other services

2) jimmy iovine and his music industry connections

3) The huge margin on beats headphones, just like the margins on apples products. It's a good fit.. people are already willing to pay for them

Having Dr Dre on board doesn't hurt either. It's also probably a show from Tim Cook - this type of purchase is sort of 'out there' for Apple, as far as I'm aware.

Zcott

tallpaul wrote: »

I think the more interesting part of this deal is what Apple actually spent their $3 billion on. It seems that $2.5 billion was for the headphones side and $500 million for the streaming service. This makes a lot more sense. The headphone Division turns over more than $1 billion per annum and therefore Apple will make their money back on this investment relatively quickly.

The $500 million for streaming is also relatively cheap considering if Apple had to start from scratch...

I suspect they wanted to buy just the streaming service but Iovine and Dre insisted on the whole company being sold. Apple had to pay a premium for what they wanted but could afford it.

Creamy Goodness

funkyflea wrote: »

This..

It's nothing to do with wearable tech and brand image. Apple have the best industrial design team in the world, with an amazing marketing department to boot. These areas are not problems for them right now.

It's most likely for:

1) the streaming service - beats took an interesting approach with their service in that it strives to be intelligent and wants to learn from you & be much better at recommending music than other services

2) jimmy iovine and his music industry connections

3) The huge margin on beats headphones, just like the margins on apples products. It's a good fit.. people are already willing to pay for them

Having Dr Dre on board doesn't hurt either. It's also probably a show from Tim Cook - this type of purchase is sort of 'out there' for Apple, as far as I'm aware.

Exactly beats electronics (the headphones part of the company) make sales of $1.3 billion a year. So if they only bought it for that they'd make their money back in just a couple of years.

Apple can make $3 billion in an opening weekend of an iPhone launch. This is peanuts for them and the other assets and invaluable.

Also this may be a shock but $3 billion to apple is just a mere 2% of the cash they have in the bank.

daRobot

Dr Dre is a phenomenal businessman, building an technically inferior headphone brand into a multi billion dollar company.

It's rarely about the product, and nearly always about the marketing efforts.

Absolute genius getting cans to be fashionable again. Going back 10-15 years ago, I would have never, ever, worn my MDRV 700's or 25 SP's out in public for fear of looking a total spastic.

How things change.