If the numbers bandied about are true, the $3.2 billion to buy rap mogul Dr. Dre's headphone and music-streaming service would be the iPhone maker's largest-ever purchase by the iPhone maker. The deal would include the streaming Beats Music subscription service and the headphone and speaker division.
Over the years, Beats has become a tremendously influential and popular brand thanks to Dr. Dre and co-founder, music producer Jimmy Iovine to strategically market the company's signature headphones, Beats by Dre.
- Apple is doing it to get control of the headphone space and the coolness of the brand.
- Beats's fledgling music subscription service.
- It's a great deal because Beats hardware is very profitable and has, in some cases, much higher profit margins than Apple products.
I think those are all good reasons and are possibly part of the calculation. But I believe the strategic calculation is a lot simpler and can be summed up in the sentence Apple doesn't want to see: "Beats Electronics, a Samsung company."
If the co-founders are selling, I believe Apple will not let Beats fall into Samsung's (SSNLF) hands. It's only logical to assume that if Apple decides to pass on this acquisition a Samsung acquisition would be an option.