Sunday - Sep 24, 2017

Apple closing in on Beats

Apple closing in on Beats

Hardware giant Apple Inc are reportedly waiting for the final touches to be put to their acquisition agreement for Beats Electronics, the music streaming and headphone maker.

According to industry reports, Apple will be paying out a cool $3.2 billion for Beats, a lot of money for a company that has been shying well clear of some of the multi billion dollar deals that have become increasingly commonplace around Silicon Valley, especially during the last year.

Apple have apparently been in the market for a subscription-based music service for some time, as they aim to expand or complement their “iRadio” ad-based channel which they launched in 2013.

Beats Electronics was founded as a partnership between fabled music producer Jimmy Iovine and “rapper” Dr. Dre, with the company become best known for the range of “Beats by Dr Dre” headphones, which rapidly became among the best sellers on the market.

Following on their success, “Beats” followed up by launching their own music service that also gained considerable support in its own right, for its slick and user friendly design and even more so for its “human” music curation, eminently preferable among music lovers to algorithm driven alternatives that most of their rivals offer.

While Apple-watchers have long speculated that the company were on the look out for a music-on-demand service, and generally agree that Beats are the best around, what may be surprising is the $3.2 billion that they are reportedly ready to pay, especailly when considering that the company was valued at just $1 billion in September of last year, after its last funding round.

Although with around $130 billion in cash reserves, paying out just $3billion of that will hardly cause Apple too much financial distress, and almost fades into insignificance when compared with the $19 billion Facebook paid for WhatsApp early this year. Incidentally the social media giant also got themselves into the headphones business not so long ago, paying out what now looks like a bargain $2 billion for Oculus VR and their virtual reality headset.

If the deal does go through, it will mark their first billion-dollar acquisition in at least a decade, with the company having been highly successful to date in developing and designing its own products in-house, contenting themselves in acquiring snippets of technology along the way, sometimes paying several hundred million dollars in the process.

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