Apple has now officially acquired Beats Electronics, and with a pretty hefty price tag of $3 billion. While this is certainly a costly deal for Apple Inc. (NASDAQ:AAPL), the company has big plans for the future of Beats. Many people have asked why would Apple spend such sizable sum of cash to purchase an audio brand? Apple CEO Tim Cook offered some answers to those questions in a recent interview.
Apple Inc. (NASDAQ:AAPL) has already purchased 27 companies in the last 15 months, and it appears the company is still on a shopping spree. However, given Apple already has $159 billion cash on hand, $3 billion and change won’t be a big deal for the company.
Tim Cook, in an interview with Re/code, explained why he felt the need to purchase the Dr. Dre and Jimmy Iovine-founded company. Apple has never purchased a high-profile company of such stature before, which makes this explanation more interesting.
When asked why Apple Inc. (NASDAQ:AAPL) would do such unusual deal, Cook replied:
This is all about music, and we’ve always viewed that music was key to society and culture. Music’s always been at the heart of Apple. It’s deep in our DNA.
What Beats brings to Apple are guys with very rare skills. People like this aren’t born every day. They’re very rare. They really get music deeply. So we get an infusion in Apple of some great talent.
Financially, it’s great, because even in the short term there are synergies. Using Apple’s global footprint, there’s hitting the gas on the subscription service, there’s distributing the headphones globally in countries that they’re not in today. There’s lots of things like that.
Tim Cook also believes that despite a mere 200,000 subscribers at this point in time, it is the “first subscription service that really got it right”, all thanks to its “human curation” aspect.
Apple Inc. (NASDAQ:AAPL) has been involved in music since it began producing iPods almost two decades ago. With Beats now under Apple Inc. (NASDAQ:AAPL)’s control, we will likely see something inovative from them.
As Jimmy Iovine said, “In the record business, you can show someone your song, and they don’t copy it. In the tech business, you show somebody your idea, and they steal it.” That’s why both the companies obviously don’t want to reveal what they’ll be building together quite yet.