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Apple Buys Beats


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Apple Inc. will be buying Beats Music for roughly 3 billion dollars. Apple has announced as of yesterday that the much anticipated purchase of Beats Music will go through as both companies had been discussing earlier this month. Apple has been under industry scrutiny recently as competitors have been updating their portfolio’s with Apple lagging behind. This move will help bring Apple back to the forefront as an industry leader.

Purchasing Beats Musicapple 2

Apple had originally stated that they were looking to purchase Beats electronics in order to modernize their technology and streaming capabilities. As of Wednesday, Apple has disclosed that they will be indeed purchasing Beats Music for roughly 3 billion dollars which is  big deal when looking at the monetary investments made over the last ten years. Many of which has been focused on buying up companies worth hundreds of millions of dollars and never exceeding that amount of money. Apple has been pegged in the past as being cheap when it came to purchasing companies or technology that they themselves haven’t produced or were uncomfortable handling, even with the hoarding of cash Apple has been known to do with 150 billion dollars in liquid cash ready for investments. That being said, this deal with Beats Music has been a step for Apple to take in the right direction as far as stepping up to the challenge being placed on the table by Pandora and Spotify.

A Wall of Separation

Apple Chief Executive Tim Cook stated “The ugly truth is that there is such a Berlin Wall between Silicon Valley and LA…The two don’t respect each other, don’t understand each other.” Apple is looking to bridge the gap between both industries as well as return to the front of music technology. This deal affords Apple the opportunity to jump start their vision of making an advance into one of the fastest growing markets of music streaming, amid the rapid decline of iTunes sales. In the wake of Pandora Media Inc., and Spotify moving ahead as far as music streaming the Apple’s early attempt eight months ago has fallen by the wayside with the failed iTunes Radio.

Music Downloads

Music downloads are currently on the decline. Early on Apple basically controlled the market when it came to downloading music and had revolutionized the industry. But Apple’s failure in recent years to continue on with the ever evolving trend has left Apple falling behind other competitors. The industry in recent months has been following music streaming over the long time music downloading trends. That being said, this deal in purchasing Beats Music would allow Apple to quickly gain ground on their competitors and continue their arc of progression among pressure from record labels urging the company to modernize with the current music streaming demands.

Better Streaming, Better Techapple 1

Last year, music streaming subscriptions surged 51 percent totaling a 1.1 billion dollar profit of the 15 billion dollars spent on music in 2013. Experts have stated that with the increase in music streaming subscriptions have also had an adverse effect on music downloads, showing that music downloads in the same amount of time had slipped 2.1 percent.  While it is important for Apple to invest in the music streaming side of Beats Music allowing for better membership subscriptions to boost the need and ability to stream music, another side of Beats Music will show a positive for Apple. The emerging popularity of Beats Music’s headphones popularized by Dr. Dre has given Apple the edge and cool factor that many of its competitors simply do not posses at this current time. The purchase of Beats Music will be having a tremendous effect on Apple’s ability to surge profit into their product lines beyond their popular iPhones and iPods.  Better technologies being produced currently by Beats can be perfected with the tech support and cash flow that Apple has at its availability and ever constant resources.

Of course Apple’s shares saw a little bit of a boost in yesterday’s trading as well. The company has the ability both financially and ability for profitable progression over the next few years to remains at the front of the music supply and technology providing industry. Although Apple’s 3 billion dollar investment purchase may not seem like much coming from a technology giant such as Apple, but their move away from more conservative investment methods is something both refreshing for the company as well as for their customers who have been pushing for newer technologies to be infused with current products and product expectations.  As mounting pressures from record companies have been voiced to Apple in recent years, the purchase of Beats Music will give Apple the boost it needs to push itself back into the limelight of supplying the ever growing demand.

 

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