So why did Apple spend $3.2 billion for Beats? Initially, there were three reasons:
- To acquire the super-profitable hardware division. Beats sells more than $1.5 billion worth of headphones ever year and is one of the most recognizable electronics brands in the world today. (Sub-reason: To acquire more knowledge in the area of wearable electronics.)
- To buy the influence and expertise of Dr. Dre, but mostly Jimmy Iovine.
- To own the Beats Music streaming service, taking a competitor out of the market.
Of those three reasons, the third was the weakest. At the time of the purchase, rumours had Beats Music with less than half a million customers. And then there was the matter of iTunes Radio, Apple’s own streaming music service. Would one be subsumed into the other? Would they both be operated separately?
Hints about Apples intentions have been subtle. How many times have you heard Apple trumpet anything to do with Beats Music? And where was any mention of Beats Music during the iPhone 6/Apple Watch announcement. Why doesn’t iOS8 come with Beats pre-installed? Why is there an anonymous music player button on the Apple Watch instead of a Beats Music icon?
TechCrunch maintains that Apple plans to shut down Beats Music in the near future, something that Apple denies. Re/code has a different spin. They say that while the brand “Beats Music” may go away, everything else associated with it will stick around.
We shall see…