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Apple to Acquire Beats Audio

The business wires are ablaze today with the story that Apple is acquiring Beats for $3B. Curiously, the press consensus (and pre-market reaction) is that it's a bad move for Apple, either because they're overpaying or because Beats' phones are poorly regarded (a curious stance, since Beats has 70% of the premium market). I disagree--$3B is bar change for Apple and Beats, I assume, is an exceptionally high-margin cash cow with tremendous brand cachet among consumers, if not audiophiles. I'm not personally sold on Beats streaming service, but I'd be surprised if it wasn't successful. Interesting move, in any event.
loomisjohnson
theo's avatar
theo
2,694 posts
 
Reading some of the business mags on line lead me to believe that MOG was struggling when Beats bought them. Also speculation is Apple was motivated more by the music service than the hardware side of Beats. So I guess my hope is that Apple will maintain the current Beats customer base by continuing things as are and allowing Android and Sonos users to subscribe. I just started my free Beats trial over the weekend as MOG shuts down in 20 days. Time will tell as it always does.
buconero117
2,311 posts
 
Just confirms my 'greater fool theory of investing. The way it works is that all you need is to find a greater fool to buy your 'investment' to make a profit. Value has nothing to do with it.
chrshanl37
835 posts
 
This will surely be the end of Beats for Sonos. It appears as if Apple is moving towards streaming which marks the end of music downloads save for High-Res.
martykl
3,578 posts
 
Buconero,

Apple isn't perfect and this acquisition might prove to be a mistake. OTOH, they've created an incredibly valuable company, taken down a horde of more established competitors, created a slate of products that dominate their sector, and grown into one of the world's most valuable brands. I'm not sure that I'd conclude that they're anybody's fool. If they successfully lever the Beats streaming platform the way I suspect they'll try to, this might well prove to be a very shrewd move.

AFAIK, none of the independent streamers are making money. It's a tough gig as a stand-alone business, but for those with more at stake, well....

Spotify is a strategic play by a consortium of major labels and they are the only target in that business right now. It's pretty clear that that way lies the future and Apple evidently believes that Beats is the best road to get there. Until they fail, I'll reserve judgement.
maxnewid
449 posts
 
I agree that the long term hidden asset is the content to populate Apple's platform of devices. My nephews all got Beat earbuds for Christmas last year. I found that they were WAY too loud and bass heavy. They really couldn't compete with my old Sony earbuds I use for exercise, yet they cost about $100. My sister didn't really care for my argument about sound quality and seemed to be more concerned about brand recognition from her kids. Therein lies Apple's interest. Some types of rock and roll are best enjoyed being played loud, but my first reaction (I guess I am getting old) to the Beats product was that the company is going to create a generation of deaf kids.
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