Tim Cook is quite aware that iTunes sales have declined in recent years because of music streaming services such as Spotify, Rdio, Pandora and others. Instead of building a music streaming service from the ground up I believe Jimmy Iovine (Beats owner) and Apple will work together to possibly improve iTunes Radio and make it more Apple-esque rather than the mediocre service it is now. In Tim Cook's words Beats "got it right" with Beats music.
You may ask why didn't Apple just buy Spotify and get it over with?
With the Beats purchase:
- Apple has acquired another revenue stream with the hardware division of Beats (the headphones). As "crappy" as people think Beats headphones sound they are not only a fashion statement but they bring with it profit.
It's quite possible we may see Apple Beats headphones soon enough to replace the traditional white ear pods we receive with a purchase of a future iPhone.
- Not everyone may know who Tim Cook is but today's youth does know who Dr. Dre is. His celebrity status would improve Apple's "cool" factor in my opinion.
- Jimmy Iovine (co-owner of Beats) has more than 20 years of experience in the record industry. I'm sure his connections to record labels and the rest of the music industry would benefit Apple's future endeavors.
All in all, I don't think the Beats purchase was a bad idea. You can't draw a conclusion about a purchase based on your personal opinion of what a pair of headphones sounds like.