Apple Offers $3.2 Billion To buy Dr. Dre’s Beats

Headphone Company
Apple is reportedly in talks to acquire Beats Electronics, the
headphone and music streaming company co-founded by rap
star Dr. Dre, for $3 billion. Apple is orchestrating a $3.2
billion acquisition of Beats Electronics, the headphone maker
and music streaming distributor founded by hip-hop star Dr.
Dre and record producer Jimmy Iovine, according to a
published report.
Citing people familiar with the negotiations, The Financial
Times says Apple could announce the deal as early as next
week. In its report posted online late Thursday, the newspaper
warned the talks could still collapse if the two sides can't
agree on some final details. Both Apple Inc. and Beats
Electronics declined to comment to The Associated Press.
The potential acquisition would add Beats Electronics's popular
line of headphones and music streaming service to an Apple
line-up that already includes digital music players and the
iTunes store, the world's top music retailer. If the deal is
completed, it would be by far the largest purchase in Apple
Inc.'s 38-year history.
The Cupertino, Calif. company has traditionally seen little need
to buy technology from other companies, reflecting Apple's
confidence in its ability to turn its own ideas into revolutionary
products such as the Mac computer, the iPod, the iPhone and
the iPad.
But Apple hasn't released a breakthrough product since its
former CEO and chief visionary, Steve Jobs, died in October
2011. The innovative void has increased the pressure on Jobs'
hand-picked successor, Tim Cook, to prove he is capable of
sustaining the success and growth that turned Apple into the
world's most valuable company and a beloved brand.
Cook has shown a willingness to spend more of Apple's money
than Job ever did. Among other things, Cook began paying
Apple stockholders a quarterly dividend and has progressively
committed more money to buying back the company's shares.
Apple's pursuit of Beats Electronics is the latest indication that
the company is having trouble generating growth on its own.
Apple already sells Beats Electronics gear in its stores, giving
the company insights into how much the trendy headphones and
other audio equipment appeal to its customers.
The negotiations also are taking place as the music market
increasingly tilts toward streaming and away from the
downloads that once drove the success of Apple's digital music
store, iTunes.
U.S. revenue from downloads — which iTunes dominates —
dropped 1 per cent to $2.8 billion in 2013, while streaming
music revenue from the likes of Pandora and Spotify soared 39
per cent to $1.4 billion, according to the Recording Industry
Association of America.
While downloads still command 40 per cent of the market,
streaming revenue now accounts for 20 per cent of total
revenue, up from just 3 per cent in 2007.
In 2012, Beats bought streaming music service MOG, which it
transformed and relaunched as Beats Music earlier this year.