On May 28, 2014, Apple Inc (Apple) announced that it was acquiring Beats Music and Beats Electronics (collectively 'Beats') for a total of $3bn, its most valuable acquisition to date. This case study assesses the Beats business, as well as the motivation for the high-profile deal, which was completed on August 1, 2014.
Features and benefits
Analyzes Beats' historical product and marketing strategy.
Examines synergies between Apple and Beats' businesses, assessing the reasons behind the acquisition.
One of Beats' major strengths is its brand image. The company has a strong standing in the music industry, owing much to the involvement of superstar hip hop producer and rapper Dr. Dre and producer Jimmy Iovine. The company has expanded its appeal by forming promotional partnerships with a number of artists from a range of popular music genres.
Beats' main products are, essentially, marketed as high-end audio products and sell at premium prices. The company has a history of partnerships with other tech companies, such as Monster, HTC, and Hewlett-Packard. As the company has grown, it has also expanded into other markets, and now offers portable speakers and car audio systems.
Streaming was the fastest growing segment of the music industry in 2013, outpacing digital downloads and physical copy sales. Beats entered the streaming market through its acquisition of music streaming provider MOG in 2012. Subsequently, the company launched Beats Music, its own-branded subscription music streaming service, in January 2014.
Your key questions answered
How has Beats fostered its strong brand image over the past few years?
Which markets has Beats targeted, and how do they compare to Apple's recent movements?
What are the key aspects of Beats' business that drove Apple's decision to make its biggest acquisition to date?
How will the acquisition serve to boost Apple's future business?