Apple to buy Beats - both the headphones and the streaming service?

The Financial Times has dropped a bombshell today by revealing that Apple has been in talks with Beats Electronics for an acquisition that could be announced as early as next week.

The price of the acquisition according to the FT’s report is $3.2 billion, which would make it the biggest Apple has ever completed. The paper points out though that there are still some issues to be smoothed out so it could all still come apart.

Both the hardware manufacturing business (Beats Electronics) and the streaming business (Beats Music) are said to be included in the purchase. It’s worth pointing out that Beats Music had been spun out into a separate entity last year - albeit still one strongly tied to its parent company - so if the report was true this would be a double acquisition.

What does this mean for music streaming? Hard to say. Apple knows that Spotify is eating into its download business especially in Europe and the US, so much so that downloads will eventually become irrelevant. The question is how Apple plans to phase out downloads gently and introducing streaming without collapsing the worldwide recorded music industry in the process - iTunes is the n.1 music store today.

On the hardware side things could be very interesting as Apple has recently filed a number of patents related to he earbuds/headphones space. Beats of course has much more advanced designs of all shapes and sizes of headphones so that would make innovative technology by Apple easier to put into practice in one stylish package.

Finally the last question and perhaps the most important one is around the brand. If this acquisition goes ahead Apple acknowledge the importance of the Beats brand or will it gobble up the company and make its products part of the Apple machine? We’ll have to wait for confirmation of the deal to find out…

(Andrea Leonelli)