Beats Breakdown: Apple Paying $2.5B for Beats Electronics, $500M for Beats Music

[aleksoctop]

When I first put on a pair of Beats headphones at a Brookstone's, I honestly thought they were broken/blown out.

For comparison, I used to own Koss, low-end grados (SR60/SR80) and multiple generations of Apple earbuds, as well as their in-ear. Those headphones are half the price or less and are superior to these pieces of shiny brittle plastic in every single way. Beats sound worse than a pair of headphones you might pick up in a sale at a drug store. That bad.

Cannot believe people pay 300 for these things.

 

[Cali Fornia]

It was the hardware.

Kudos Beats, you just found the richest sucker to purchase your overpriced headphones, and the silly suckers are smiling like they got a good deal

And most of well played Dr Dre , YOUR mega rich! And damn lucky cook is running the show.

So apple bought a headphone company that is renowned for having poor sound quality. Given apple in house headphones are nothing to call home about, they are basically not going to improve the sound quality going forward as a result of this spend.

I hope this is not a stupid attempt to be cooler than Samsung ...... Given how much money Samsung is throwing into marketing .

You know that Beats makes a billion dollar revenue (and decent 9-digit earnings) each year?
This investment is gonna pay off very quickly.

 

[Rogifan]

Cos they are ***** , Apple are supposed to do quality products! a sheer waste of money..conned by a record company exec simple as that.

Hey I never liked this deal, and I still don't. But it doesn't surprise me that Apple is paying mostly for the headphone business as that is the business making all the money. If I was Eddy Cue though I'd be a bit embarrassed that Apple had to spend $3B to get something off the ground that Apple should already have in place. He said Apple has been thinking about streaming music for a long time. Well, why has it taken you so long to get it done? Why did you let Pandora, Spotify, etc. come in and dominate a space you should be dominating? Another question I have (which Jon Fortt asked on CNBC) is, so Apple wins streaming music. So what? Is that really a big deal? To me this is Apple looking backwards, not forwards.

 

[Switchback666]

Dre looks so sexy

 

[MH01]

You know that Beats makes a billion dollar revenue (and decent 9-digit earnings) each year?
This investment is gonna pay off very quickly.

If Apple bought them to run as a separate company, cool.

I suspect though that Apple hardware will incorporate Beats speaker/headphones. For me that is a step backwards.

 

[janstett]

Wow, I was thinking they wanted it pretty much for the streaming service, and the hardware sort of just came with the deal.

Makes me really wonder what Apple has up their sleeve for the future...

They have Jony Ive and they're bringing in Beats for their hardware design???

Then again, hasn't Jony been relatively coasting (whether that's his fault or Apple's), minor tweaks to the iPhone since the 4, and of course the new Mac Pro, but hardly like the heydey of 15 years ago.

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Yes, so renowned for having poor sound quality that they sell billions of dollars worth of headphones.

Ever heard of Bose?

Overwhelming marketing will mask the ignorance of the uninformed.

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Everyone keeps going on about how Beats headphones are lousy, or are overpriced, or are worse than Sennheiser, etc., etc. My impression is that most complaining people never owned a pair and are simply regurgitating common sentiments. Much like Bose. People that own Beats and Bose like them and typically refer them to others. Blame the marketing? Probably not. Show me some data comparing Beats with other comparably priced headphones...data on the neodymium magnets and materials, the drivers and the engineering.

You're right, it's the same as it is with Bose. They aren't utter crap -- they're better than the low end stuff most people are exposed to in the mainstream at big box stores, or what comes with a device for free, etc. They both thrive on people looking for something better than the low end junk but not knowing enough yet that the "unique sound" is due to DSP and not best quality hardware and sound reproduction accuracy. Frankly the audiophile speaker & headphone companies do a piss poor job of making themselves known to the broader market, that's where Bose and Beats live.

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Are overpriced bad quality headphones used by "cool" people really worth $2.5 billion to Apple? This just further proves that Apple is dangerously close to becoming nothing but a fashion symbol.

We know they're sitting on a huge war chest and are probably just eagerly looking for places to spend their money.

Apple could have bought the LA Clippers for a mere $2b.

 

[philstubbington]

Not really that suprising....

Apple have paid for the bit that makes actual money, and paid less for the bit that doesn't (or, not as much, anyway).

Nice to see a valuation based on cold hard cash, rather than the intangible valuations of companies that Facebook and Google acquire. In the case of the latter of course, even when it's a company like Motorola, they still pay over the odds and then write it off shortly afterwards.

 

[Steve121178]

If Apple bought them to run as a separate company, cool.

I suspect though that Apple hardware will incorporate Beats speaker/headphones. For me that is a step backwards.

How? Apple's headphones and speakers are appalling.

 

[DELLsFan]

Somehow I feel this marriage isn't going to last.

+1

There's just something wrong about this. I can't put my finger on it yet ... but I feel like there were probably better ways for Apple to spend those billions.

 

[MH01]

How? Apple's headphones and speakers are appalling.

Have you heard Beats?

If Apple were serious about improving the quality of thier headphones and speakers, why but a company that would just improve them.

They bought them to appeal to the younger crowd.

 

[kas23]

Does anyone else notice that in that photo, everyone except Dr. Dre is hiding his iWatch?

Good observation. I think it's pretty obvious Cook and Cue are hiding their watches. As for Iovine and Dre...I just don't think they're the type that would wear $100-200 timepieces, especially Dre. I'm sure the watch he's wearing is more valuable than the cars we drive.

 

[Steve121178]

Have you heard Beats?

If Apple were serious about improving the quality of thier headphones and speakers, why but a company that would just improve them.

They bought them to appeal to the younger crowd.

They have bought a very popular fashionable brand that appeals to the under 25's.

I know Beats headphones are pretty average, but if people are happy with them, then so what? Apple can tempt some of these Beats customers to purchase Macs & iDevices with some clever marketing & branding. Plus Apple can build on what Beats has started with their music streaming service.

It all makes sense to me. This is not aimed at you, but it makes me laugh how so many keyboard warriors think they know better than Apple. Apple would not splash $3bn on a business if it was not going to be a good investment. That's not how Apple operates.

 

[somethingelsefl]

Try out the BEATS Music app. you'll be surprised just how well it fits in with Apple's belief to "think different". It's got some work to do, but I like where it's headed...a completely different (and welcome) approach to music than Spotify or Pandora.

It's style, and it's "sentence creation" method of music pairing are very clearly Apple-aligned elements.

I'm a believer.

 

[thejadedmonkey]

I am in love with these posts. Reading how upset MR is over how a company runs its business is hilarious.

Merge Beats subscription with iTunes Match and iTunes Radio and I could see myself using it, actually. Until then, I'm set on owning phys. copies.

Oh I completely agree. But that's a 500 million dollar deal. Apple then went on to pay 2.5 billion with a B for their headphone and speaker division.

 

[MH01]

They have bought a very popular fashionable brand that appeals to the under 25's.

I know Beats headphones are pretty average, but if people are happy with them, then so what? Apple can tempt some of these Beats customers to purchase Macs & iDevices with some clever marketing & branding. Plus Apple can build on what Beats has started with their music streaming service.

It all makes sense to me. This is not aimed at you, but it makes me laugh how so many keyboard warriors think they know better than Apple. Apple would not splash $3bn on a business if it was not going to be a good investment. That's not how Apple operates.

Agree about them going for the youth, question is, will that impact the mature market with the $$$$$ to burn, time will tell.

No offence, but it also makes me laugh how many keyboard warriors defend every move Apple makes without their own opinion other than Apple knows better than the rest of us /yawn

To make it clear, Apple has never spend this much on an acquisition, so you have no substance in your " Apple would not splash $3bn on a business if it was not going to be a good investment. That's not how Apple operates" This is a brave new world for them.

So fellow keyboard warrior, let's see how it plays out!

 

[MrXiro]

Looks like it WAS for the hardware then.

Not exactly. They want the software infrastructure, which most importantly includes Beats' Execs.

The hardware is like caviar garnish. It's expensive and a sure thing. But they are banking on growing the software and making more money from it. Hardware will make them 1X-2X their profits for example but growing the software will net them the possibility of 100X the profits (only examples to state my point not actual numbers).

 

[MacVista]

That is some Breakdown of numbers alright, real Breakdown with a capital "B".
I think that Cook saw all that bling and fell for it after being told that Dre is a physician turned 'musician.'
I won't be surprised if Beats Cook'ed their books.

 

[Steve121178]

Agree about them going for the youth, question is, will that impact the mature market with the $$$$$ to burn, time will tell.

No offence, but it also makes me laugh how many keyboard warriors defend every move Apple makes without their own opinion other than Apple knows better than the rest of us /yawn

To make it clear, Apple has never spend this much on an acquisition, so you have no substance in your " Apple would not splash $3bn on a business if it was not going to be a good investment. That's not how Apple operates" This is a brave new world for them.

So fellow keyboard warrior, let's see how it plays out!

I'm not defending Apple, I'm just choosing not to freak out about a deal that I don't really have much knowledge of.

Personally speaking, I can't see the acquisition being a bad thing. The worst case scenario is people get the choice of using a decent music streaming service that makes full use of Apple's resources and perhaps some Beats branded earphones supplied with all new iPhone's (anything is better than those crap EarPods).

 

[krravi]

You know that Beats makes a billion dollar revenue (and decent 9-digit earnings) each year?
This investment is gonna pay off very quickly.

You know people say that a lot.. and then you have to wonder why isn't Apple buying into commodities or pharmaceuticals or cancer drugs or gold.. or real estate.. you know they are all great investments too.

I have to wonder if Apple is some sort of investment company?

 

[phillipduran]

Did you notice that Cook is covering up his iWatch prototype?

 

[phillipduran]

When I first put on a pair of Beats headphones at a Brookstone's, I honestly thought they were broken/blown out.

For comparison, I used to own Koss, low-end grados (SR60/SR80) and multiple generations of Apple earbuds, as well as their in-ear. Those headphones are half the price or less and are superior to these pieces of shiny brittle plastic in every single way. Beats sound worse than a pair of headphones you might pick up in a sale at a drug store. That bad.

Cannot believe people pay 300 for these things.

That is what I walked away saying when I put a pair on at Best Buy. Why the high price tag?? I assumed the price must have had something to do with some provided services because the sound quality did not justify that cost. I have a pair of $65 headphones I use for Skype that sound better.

 

[roadbloc]

They bought Beats for the hardware!? Apple must know something I don't because every Beats product I've seen has sorta looked nice but has sounded awful.

 

[marstan]

Yes, so renowned for having poor sound quality that they sell billions of dollars worth of headphones.

Nobody ever got rich overestimating the intelligence of the American consumer.

 

[JHBrown]

If Apple bought them to run as a separate company, cool.

I suspect though that Apple hardware will incorporate Beats speaker/headphones. For me that is a step backwards.

Really? Think about what you just said. Ready for it? The current earbuds suck. This can only be an improvement.

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That is some Breakdown of numbers alright, real Breakdown with a capital "B".
I think that Cook saw all that bling and fell for it after being told that Dre is a physician turned 'musician.'
I won't be surprised if Beats Cook'ed their books.

Very bad attempt at a joke. Stick to your day job.

 

[RenoG]

I am in love with these posts. Reading how upset MR is over how a company runs its business is hilarious.
.

I find it very funny, its entertaining clicking and reading these post. The way folks here are reacting to this you'd think that they literally have a personal intimate relationship with Apple Co. Its actually kinda disturbing now that I think about it........Do the general public people get this winney and disturbed when the likes of Proctor & Gamble, Coka Cola, Kellogs, Nesle, RubberMaid, Pioneer, Firestone, Cheveron etc. make similer moves?