Apple to buy Beats, but why?

The tech-rumour mill is in full swing, with both Google’s I/O conference and Apple’s annual Worldwide Developers Conference (WWDC) both just around the corner. Prepare for much speculation, plenty of hypotheticals and then some before these two giants announce what users can expect from each respective eco-system for the next year. Google has recently acquired all sorts of companies, including Nest, but this post is about the latest rumour surrounding Apple.

It is said that the Cupertino based company is looking at purchasing Dr Dre and Jimmy Lovine’s famous “Beats Electronics.” Beats is better known as an accessory for Android driven HTC devices, or for their standalone audio equipment, but their recent foray into the streaming music business might be why the company seems an appealing option to Apple.

The rumoured price of the acquisition is set to be around $3.2 billion, and to be honest, I’ve dissected this every which way, and honestly, I don’t understand it. And when researching for this post, I realised that I’m definitely not alone. Many commenters, analysts and experts have called this a number of things, some good, but mostly they’re not. Take “struggling to see the rationale behind this bad idea” from Piper Jaffrey’s Gene Munster, long-time Apple analyst, or Forbes’ contributor, Pascal-Emmanuel Gobry’s statement that “if the reports Apple are in talks to buy Beats headphones are true, it’s insane, and it probably casts a pall on all of Tim Cook’s leadership,” and it’s pretty clear that even the experts are puzzled by the talks.

Other views include the view that Apple buying Beats indicates that Apple is on a roll and it’s taking necessary steps to help bolster their flailing iTunes Radio offering. One of Beats’ biggest advantages is that it converts free users to paid users at an incredible rate. Beats specialises in hardware too, so if the purchase does happen, expect to see an improvement in Apple audio quality and offerings across the board, including Macbooks and iMacs.

Forbes’ writer Gobry makes a very good point when he says that there is “one good idea in the Apple-Beats deal: and that’s making big acquisitions.” This is because under Steve Jobs, Apple never wanted to make big purchases, however, every so often a highly successful business pops up and immediately becomes attractive to own, and I think that’s exactly what this is. Apple is buying a successful company. Think Facebook’s purchase of Instagram and WhatsApp and Google’s purchase of Nest and Waze.

So if the acquisition does happen, be sure that WWDC will have all the juicy details, and I for one can’t wait for “developer season.” This year’s is shaping up to be a really significant one, there have been many massive purchases, exciting new technology popularised and with less than two months to go before we know what Apple and Google have planned, you can bet that we’ll be doing all we can to keep you up to date.