Apple officially confirms Beats acquisition for $3 billion

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Apple has confirmed the Beats Electronics acquisition for $3 billion, after a week of silence and questions on whether the two companies had stopped negotiating, it appears they have finally got round to a deal, $200 million short of the original rumor.

The acquisition is the largest in the history of Apple, beating the recent acquisition of AuthenTec for around $500 million, the second biggest acquisition pre-Beats was for Steve Jobs’ NeXT for around the same price.

Apple has never been a company to go all out on their acquisitions, preferring to acquire small talent startups or work on the product themselves. This is a very different ethic compared to Facebook, Microsoft and Google who have multiple billion dollar acquisitions.

Beats Electronics brings two parts to the acquisition, their audio hardware side and their music streaming service. We believe Apple acquired Beats more for the music streaming service than the audio hardware, although the other part will most likely work on Apple’s audio for all their hardware in the near future.

iTunes is one of Apple’s biggest services for revenue, but it is starting to wither as services like Spotify and Rdio begin growing. Apple has made iTunes Radio to curve some of Pandora’s revenue, but with Beats Music it gives them a better music streaming service to compete against Spotify.

Analysts are still trying to figure out what Apple will do with Beats Electronics after the media dies down. Will Apple continue the hardware brand and will Beats continue pumping out different headphones and audio speakers or is this an area Apple will look to deconstruct.

It’s unclear now, but in the next few months we are bound to see Apple’s real reasoning for acquiring Beats, whether it was just the music streaming service or the “talent” as CEO Tim Cook said in an interview.

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