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Apple Opens a New Chapter: Buys Beats Electronics for $3 billion
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Apple Opens a New Chapter: Buys Beats Electronics for $3 billion

Apple begins a new chapter in the music business today with the acquisition of Beats Electronics for $3 billion. Th...

Apple Opens a New Chapter: Buys Beats Electronics for $3 billion

Apple begins a new chapter in the music business today with the acquisition of Beats Electronics for $3 billion. The sale consists of $2.6 billion in cash and $400 million in Apple shares. The headphone and music streaming company will bring both Jimmy Iovine and Dr.Dre to Apple’s Cupertino HQ. Despite being a new acquisition, the collaboration between the two companies has old roots.

 

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“Beats by Dr. Dre” headphones have been sold in Apple’s retail stores since they first hit the shelves, accounting for 51% of sales shares in the $1 billion headphones market.

The announcement comes three weeks after news of the negotiations made headlines.  This is the biggest acquisition in Apple’s history, a price Tim Cook and his team had to pay if they want to spice things up in the iTunes store.

 

“We’ve dated, we’ve gone steady and now we are getting married. This relationship started a decade ago, so we know there is an incredible cultural lift,” says Apple CEO Tim Cook.

 

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The acquisition is aimed at boosting the brands' popularity with younger consumers, a crucial demographic for Apple if they are to continue to be a major influencer in the digital music industry.

 

Even Apple’s co-founder Steve Wozniak gave a thumbs up to the addition of Beats, though he has some concerns about the whole deal. Apple’s iTunes has reached a plateau, and he thinks that this strategy will improve the service enough to help overcome it.

 

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Amid speculations and predictions about why Apple is buying Beats, Tim Cook has said that the primary reason for this major investment is Beats Music, the streaming service that might just lift Apple’s brand. Apple’s own attempt, Ping, ended in failure.

Moreover, the Beats music app, which at the moment has more than 250,000 subscribers, is available for both Windows and Android smartphones, and has a desktop version that makes it more accessible to a mass audience rather than targeting only Apple consumers.

 

With Beats' software technology patents and Iovine in charge of content, Apple could shape up the iTunes service by expanding its product line and marketing. In return, iTunes could see a lot of new subscribers.

 

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