Apple buys Beats for $3 billion
Apple Inc has reportedly purchased Beats Electronics, the brainchild of hip hop producer Dr. Dre and music mogul Jimmy Iovine.
According to a report from Reuters Technology, Apple will buy Beats for roughly $3bn (£1.8bn) and it is expected that the product's co-founders Dr. Dre and Iovine will join Apple as part of the acquisition also.
How will Beats Electronics benefit Apple?
The relationship is expected to bridge the gap between Apple and the music industry, which has viewed the company with suspicion in recent years and urged the iPhone maker to invest more in subscription services; which is set to surpass download sales in coming years.
Founded in 2008, Beats Electronics is known to most for its music software which consists of a range of headphones, earphones and speakers. Early this year the brand branched out to include a music streaming subscription service, Beats Music, which has an estimated 250,000 paying subscribers.
This is a significant purchase for Apple, a company that is widely reputed for developing its technology in-house rather than buying up smaller firms as is the tendency of Facebook and Google. In an interview with the New York Times, Apple CEO Tim Cook said:
"Could Eddy's [Eddy Cue, Apple's senior vice president of Internet Software and Services] team have built a subscription service? Of course... You don't build everything yourself. It's not one thing that excites us here. It's the people. It's the service. These guys are really unique... It's like finding the precise grain of sand on the beach. They're rare and very hard to find."
Dan Nolan, managing director at theEword said: "This could be a very important move in the evolution of Apple's brand. Having Beats under its umbrella will give it the scope it needs to compete with subscription giants such as Spotify, while having music heavy weights on side has the potential to do wonders for how the company is regarded by the industry."