Apple is close to closing a deal to buy Beats for a reported $3.2 billion.
While Beats commands a leading position in the premium
headphone market, its real value to Apple is in revitalising its
“cool” at a time when iTunes has waned in popularity and Samsung’s
marketing campaigns have savaged the iPhone’s brand.
For several competing headphone brands who currently sell
their products via Apple stores the big question is whether Apple will drop
competing brands and solely sell Beats sound products.
The deal is likely to be seen as an admission that Apple
needs to look outside its Cupertino labs to continue making an impact.
Recently Apple executives admitted that its brand is in need
of a revamp. Internal emails released during its recent patent trial with
Samsung showed that its marketing chief Phil Schiller considered changing
Apple’s ad agency after the success of its Korean rival’s “next big
CNBC claim that Apple is paying a hefty premium for cool:
Beats took a $500m investment from Carlyle in September 2013 that valued the
company at more than $1 billion. “In terms of acquisitions, Apple has been
very, very light in their activity,” said Richard Lane, analyst at
Moody’s. “I don’t think they’ve spent $1 billion in any of the last four
Mr Cook said last month Apple was “on the prowl”
for more acquisitions, after buying 24 companies in the past 18 months and he
was not averse to large acquisitions.
Silicon Valley, after Google acquired smart home developer Nest Labs for $3.2
billion and Facebook offered an initial $19 billion for WhatsApp Messenger.: