News broke the silence of many tech enthusiasts after they heard that Apple is in discussion whether they will buy Beats Electronics for $3.2 billion cost. If ever the transaction will happen, Apple might be facing a difficult time for their market.
Beats Electronics is known as the high-end headphone maker but now encountering a decrease of its sales from the previous years due to failure of keeping their digital music business up to date. It reminded the Apple Company that what they are getting is not a sure investment at all. Besides, Apple’s music business with iTunes is much stable. Why does Apple have to engage in buying an expensive hardware manufacturer and streaming service?
Financial Times first reported last Thursday that Apple planned to purchase Beats Electronics founded by Dr. Dre and music producer Jimmy lovine. It might be one of the largest investments of Apple since Steve Jobs’ NEXT $400 million.
Though iTunes is still one of the largest music stores in the internet, Apple is concern of the decreasing sales of digital music. Last June 2013, the company launched a streaming music bandwagon with iTunes Radio but consumersdoesn’t embraced it that much. According to Billboard, only 1% to 2% of listeners decided to buy the apps.
There is a hope for Beats that Apple will buy the stocks as the company tries to convince the latter that Beats is perfect to be partnered with Apple because it uses an algorithm that plays the music that suits to the listener’s mood. In this case, Apple’s music scales can eventually grow.
Another advantage is that headphones produced by Beat’s are highly advanced compared of Apple’s. It is far superior than EarPods by Apple.We are struggling to see the rationale behind this move,” wrote Piper Jaffray analyst Gene Munster. “Beats would of course bring a world class brand in music to Apple, but Apple already has a world class brand and has never acquired a brand for a brand’s sake.”
Jaffray is quite right on this but Apple probably has a greater plan for the future of its company. Many analysts are waiting for the result of this deal.