The Financial Times reports Apple Inc. is closing in on a deal to buy Beats Electronics—specifically, the company’s headphones and streaming music service—in what would be the Cupertino company’s largest deal to date.
Obviously, a deal like this would have huge implications for Apple—particularly its music-related divisions, including iTunes, the fledgling iTunes Radio streaming service, as well as the company’s mobile devices, which all ship with a pair of Apple’s white in-ear headphones, called “EarPods.”
First, iTunes Radio will likely see a boost from Beats’ own streaming service, which launched earlier this year. Our review of Beats Music said the program felt like a human DJ “leading you from familiar places to unfamiliar ones all while keeping you in the proverbial groove.” We further predicted Beats Music could be the best music streaming service out there—perhaps Apple thought the same thing. In the meantime, Apple is expected to offer a few improvements to iTunes in iOS 8.
Recently, ReadWrite ran a story about the possibility of Apple producing new headphones that would could measure one’s biometric activities, such as one’s pulse or oxygen levels. As we pointed out in that story, researchers have proven “the science is there” for in-ear monitoring systems that can inform doctors about cardiovascular risk factors, but “a health-oriented in-ear solution has never been perfected, especially at a mass scale,” simply because fitness devices need to be fashionable and “send the message that you’re into exercising and taking care of yourself.”
Apple typically acquires smaller companies from time to time, usually under the radar—Apple quietly purchased 24 companies in the last 18 months, if you can believe that—but this potential deal for Beats would be a blockbuster, similar to the other recent billion-dollar acquisitions in Silicon Valley. Google purchased Nest Labs for $3.2 billion, while Facebook offered what amounted to roughly $19 billion for the messaging app WhatsApp.
Beats’ music streaming service is performing well on the App Store charts, beating out its competitors Spotify, Pandora and SoundCloud, but as Business Insider’s Jay Yarow points out, Beats’ current hardware is hardly desirable and its software is arguably middle-of-the-road. This Google search doesn’t help Beats’ case much, either:
That said, any Apple executive would be quick to assert that music is, and will always be, a major part of the company’s DNA. So iTunes and Apple’s various music services—headphones, streaming software and otherwise—will always be a big focus, and in recent years, Beats has proven highly successful at selling its headphones and software services, particularly to the younger crowd. Apple would certainly find the company’s sway with music lovers desirable, and likely worth the $3.2 billion or so it is offering—which would be just a drop in the bucket compared to Apple’s $100 billion war chest.
Co-founders and music producers Jimmy Iovine and Dr. Dre said the poor sound quality of Apple’s earbuds is what initially inspired them to create Beats Electronics in 2008.
This story is developing, and we’ll continue to update this article as we learn more.