This article was originally posted in May 2014
Apple are in talks to buy Beats the Californian producer of the ubiquitous headphones for a rumoured $3.2bn. But we’ve got some bad news for those of you who are expecting to get a free pair of beats with your new iPhone 6 come the Autumn. The simple fact is this deal isn’t about headphones, or Apple’s aspirations to be ‘cool’ again. This is Cupertino trying to compete in the new world of streaming music services such as Spotify and Pandora which have sprung up in the last few years, threatening Apple’s rather lucrative iTunes download service.
It’s not surprising, Apple would make what is their biggest acquisition to date, to try to protect their iTunes business, because just behind app sales, music and video sales make up a sizeable chunk of Apple’s mighty $37bn yearly profit*. With some analysts saying that if Apple were to spin-off iTunes as a separate business it would sit somewhere at 130th on the annual Forbes 500 rich list*.
It’s not surprising, Apple would make what is their biggest acquisition to date, to try to protect their iTunes business, because just behind app sales, music and video sales make up a sizeable chunk of Apple’s mighty $37bn yearly profit.
The Beats music service launched back in January this year, and initially was plagued with server problems forcing Beats for a time to restrict new users signing up*. Although it would seem Apple and Beats have talked to each other about their music service and business plan for sometime with a source revealing that “Apple Chief Executive Tim Cook met with Beats CEO Jimmy Iovine during a visit to Los Angeles in late February to find out more about Beats’ “Project Daisy”, a music subscription service the company announced in January”*.
Apple Launched its own foray into the streaming music world a little over eight months ago. Entering what is slowly becoming a rather crowded market. With Spotify, Pandora, Rdio, Google Music and Xbox music among the well-known services all competing for users. Could the Beats acquisition give Apple the ability, required to make iTunes Radio a realistic alternative in this already crowded market ?