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Apple Confirms Its $3 Billion Deal for Beats Electronics

nytimes.com

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Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#111

Post by abalone »

austenallred wrote: post #89
abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

It seems a bit absurd to pay $3 Billion for an acquihire/component deal, but Apple has $145 Billion in the bank and just bought the most popular non-Apple name in music.

It's not that absurd when you factor in the profitability of the headphones business. It's interesting, not because Apple would overpay for what they wanted (they didn't), but because they looked past the most obvious aspect of Beats from a market valuation perspective to the relatively more startup-y aspects of it.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#113

Post by sz4kerto »

baddox wrote: post #55
sz4kerto wrote: post #42

Earlier quoted context omitted.

> reinvented the higher-end headphone marke There's zero high-endness about Beats headphones. They're all right (at least if they were priced around 30% of their current price), but really, they don't sound particularly good.

That doesn't mean they're not part of the higher-end headphone market .

High-end is a sonic category, not a price category. There are extremely expensive audio systems that are targeted towards concerts, etc..

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#114

Post by graublau »

antr wrote: post #95
abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

For those of us not familiar with Beats, what is so special about the music service compared to (for argument sake) Spotify?

Anyone think Rdio would be a much better fit for streaming?

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#115

Post by qdog »

redthrowaway wrote: post #78
SDGT wrote: post #44

Earlier quoted context omitted.

> reinvented the higher-end headphone market. Rebranded mid-range electronics with pop star endorsements and hype. Do people really consider Beats to be high end?

A Lexus is a re-branded Toyota; it's still high-end.

Lexus cars have more differences from the similar Toyota model than just a new badge. Beats are pretty much just a badge.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#116

Post by tinkerrr »

abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

They could always just spinoff the headphones side of the business at a later date if they choose to. The revenues there were close to $1 billion last year, so it isn't unlikely. After all, Google kinda did that with Motorola Mobility, right?

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#118

Post by fizx »

austenallred wrote: post #89
abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

It seems a bit absurd to pay $3 Billion for an acquihire/component deal, but Apple has $145 Billion in the bank and just bought the most popular non-Apple name in music.

They can always sell/spin out the headphones business once the acquisition stabilizes a little. See also: Google/Motorola.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#119

Post by JumpCrisscross »

abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

Wild hypothesis. Amazon started as a book distributor. Now it is fighting to become a publisher. iTunes + iPod started as a music distributor. What if it now has ambitions as a label? How would one build that out of Cupertino?

One would start with a fringe, fragmented genre, to serve as a beachhead. Fragmented by not flat - there should be a node near the top of a hierarchy which can be acquired and leveraged.

$1.3 billion in 2013 headphone sales justifies a $3 billion valuation neatly by itself. But this acquisition certainly comes with interesting optionality.

Re: Apple Confirms Its $3 Billion Deal for Beats Electronics

#120

Post by achompas »

nostromo wrote: post #93
abalone wrote: post #70

The most interesting reveal from Tim Cook's quote is that he only mentions the music service and the talent, not the headphones. That's super interesting. It basically means Apple looked at this like a typical Apple aquihire / component technology purchase (of the service), that just happened to have a multi-billion dollar profitable accessories business attached to it. That makes it a very unique kind of deal.

"Unique" is one way of putting it. Another is "messy." If they wanted the headphones or the talent or the streaming service, they could have bought any one individually, or purchased a number of competing services that are better in each of those spaces. The fact that everyone is so confounded by this acquisition makes me think that Apple purchased something non-public.

I don't believe people are actually confounded by this acquisition. The headphones are wildly profitable and the Beats brand is incredibly strong. This deal is easily justifiable.
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