Neil Hughes
Apple on Friday gave an official welcome to Beats Music and Beats Electronics, which are now a part of the Cupertino, Calif., outfit after the $3 billion purchase price was finalized.
Apple added a "welcome" page for Beats to its own website on Friday, and the official Beats site was also updated to reflect Apple's purchase. The announcements would suggest that Apple did not face any scrutiny from the U.S. government, while the European Commission approved the deal earlier this week.
In addition, Vivendi revealed on Friday that it sold its stake in Beats Electronics LLC to Apple for $404 million. The company had a 13 percent position in the premium headphone maker.
It was announced in May that Apple had entered a deal to buy Beats for $3 billion, with about $400 million of that buyout in stock. Apple's $404 million payout to Vivendi could suggest that its stake represented the stock portion of the deal.
Apple's new Beats section of its website welcomes the acquisition "to the family." It also notes that Beats cofounders Jimmy Iovine and Dr. Dre, who are now Apple employees, "have created beautiful products that have helped millions of people deepen their connection to music."
Apple said it plans to "elevate" the experience of Beats headphones to even higher levels through the purchase.
"Today we are excited to officially welcome Beats Music and Beats Electronics to the Apple family," Apple's page reads. "Music has always held a special place in our hearts, and we're thrilled to join forces with a group of people who love it as much as we do."
Over at the updated Beats site, the headphone maker has told its customers that "there's a new instrument in the Apple family." It notes that in the early days of digital recording, the Macintosh was "the instrument of choice," while the iPod led the revolution in digital music, and the iPhone and iPad became instruments of their own.
"Starting today, we at Beats are fortunate to add our instrument to this legacy by joining Apple," the Beats site reads. "The products we build together will allow us to reimagine sound once again and to continue this great tradition of bringing imagination to life."
Apple's $3 billion acquisition was not only for the Beats headphone business, but also represents Beats Music, which is an on-demand subscription streaming music service available on desktop, iOS, Android and Windows Phone. In the breakdown of the deal, Apple paid about $500 million for Beats Music, and $2.5 billion for Beats Electronics.
Though Beats is best known for its headphones, the Beats Music product received top billing from Apple when the deal was announced back in May. Apple has said it plans to keep the subscription Beats Music service intact, and as its own brand, alongside existing iTunes Radio free streaming and song purchasing through the iTunes Store.
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111 Comments
Now that it is official, maybe soon the point of this will come out.
""have created beautiful products that have helped millions of people deepen their connection to music." I wouldn't call this beautiful... :no: but maybe it gives teenagers a "deeper connection to music". :p [img]http://techenjoy.com/wp-content/uploads/2013/12/NFC-Beats-Pill.jpg[/img] OT: why does this site push you over to the App Store now? I've noticed that several times this week. Quite annoying.
Meh. Still has the whiff of a payoff to Jimmy Iovine.
[quote name="sog35" url="/t/181658/apple-officially-closes-on-3b-purchase-of-beats-headphones-streaming-service#post_2572400"]Bravo! Bravo! This is the best! Apologies to all the old crusty white men here. Apologies to all the closet neo-nazi's. [/quote] Ugh. I hope you understand how ridiculous your comments look.
Now that it is official, maybe soon the point of this will come out.
Probably not in the short term. It often takes about 18-24 months for the full impact of the acquisition to become apparent.
From the Beats hardware side of the business, they are one month into the Apple's Q4, so the impact of that portion really won't be reflected in Apple's earnings for until Q1 FY2015. More importantly is the timing of Beats product cycles and when the product line refreshes to new products designed and manufactured under Apple's umbrella.
The software/service side of the business is murkier. Typically Apple's software/service acquisitions are subsumed into OS X, iOS or iCloud, and contribute across a wide spectrum of Apple's products and/or services. Whether its a more discrete service like Siri or something like the Apple Maps (which is an amalgam of their various mapping acquisitions), it is impossible to say how one single acquisition monetarily affected Apple's bottom line, at least from a revenue perspective.
Both Beats Music and Apple own streaming music services had relatively few customers, it is unknown how these services will grow.
Note that Apple themselves typically do not provide specific reasoning for their various acquisitions (heck, they don't even divulge a lot of them).
They did not discuss the purpose of their acquisitions of P.A. Semi (2008) and Intrinsity (2010), but the effects of both finally emerged with the A6 and A7 processors, not in specific functionality, but just in the nature of Apple's design differentiation vis-a-vis competitors' ARM implementations.
My guess is that we won't realize the full impact of the Beats acquisition until early 2016 at which time it might be considered a great, good, or disappointing acquisition.