Apple bids $3.2 billion to acquire Dr Dre’s Beats

Apple could be set to acquire Beats Electronics for an eye-watering $3.2 billion, reports suggest.

Amid Facebook and Google’s recent flurries, Apple has mostly been conspicuous by its absence from the acquisition scene. But it seems that is about to change, since news has emerged that the tech giant is in talks to acquire Beats Electronics for the huge price of $3.2 billion (£1.9 billion).

That would represent the biggest acquisition in Apple’s history – Apple founder Steve Jobs was famously against such high-value acquisitions.

Beats, the company founded by hip-hop icon Dr Dre and producer Jimmy Iovine, began producing high-end audio equipment such as headphones in 2008 and eventually branched out to provide a music streaming service earlier this year.

Apple could be set to acquire all of this in the deal, which has raised eyebrows among analysts. The Californian tech firm’s iTunes is the world’s biggest download service and iTunes Radio was launched earlier this year, an online radio service which shares many features with streaming services such as Spotify.

“This is really puzzling,” James McQuivey, an analyst at Forrester, told the BBC. “You buy companies today to get technologies that no one else or customers that no one has. They must have something hidden under the hood.”

So why is Beats so attractive to Apple? Simply, it has been suggested for some time that Beats might be the first real challenger to Spotify’s position as the dominant force in music streaming. Since Apple has not yet come up with a fully-fledged cloud-based streaming service of its own, like many other companies it has decided to buy rather than develop an alternative.

Although the Beats brand is so strong that it makes sense for it to stay fairly independent of the Apple umbrella, it is fair to say that Tim Cook’s company has realised it needs help with its own service offering.

For all of the loyal customers is has accumulated thanks to historically high iPod and iPhone sales, users are often willing to admit that iTunes leaves a lot to be desired. The user interface is often slow and clunky and successive updates have still left many customers wanting more. Beats may be a huge acquisition for Apple, but it is clear why Tim Cook is taking the opportunity.

<Top image: Zaya Ariuna>