The Real Reasons Apple Bought Beats, Straight from Tim Cook’s Mouth

Apple CEO sends company-wide email explaining $3Bn/€2.2Bn spending

By on May 29th, 2014 13:41 GMT

It’s been two weeks since the first rumors broke regarding Apple’s intentions to buy Beats. Two weeks filled with countless rumors and speculation from people in every industry. Wall Street in particular was baffled by the news, but some immediately spotted a silver lining.

However, the full reasoning behind the costly acquisition was only revealed after it had been confirmed. And it came straight from the mouth of Apple’s CEO. After sending out the press release, Tim Cook issued a company-wide memo explaining the move.

“Team,” he began, as usual. “This afternoon we announced that Apple is acquiring Beats Music and Beats Electronics, two fast-growing businesses which complement our product line and will help extend the Apple ecosystem in the future. Bringing our companies together paves the way for amazing developments which our customers will love.”

The message continues with Cook boasting about Apple’s love for music, fostered by Steve Jobs and inherited by the current leadership. The company’s music business is currently handled by Eddy Cue, Apple’s Internet services chief. His team will grow to include Jimmy Iovine and Dr. Dre as part of the acquisition.

Image
“Beats co-founders and music industry pioneers Jimmy Iovine and Dr. Dre will join Apple, along with their team of employees,” said Cook. “Jimmy has been on the cutting edge of innovation in the music industry for decades, including as a key partner for Apple in the launch of the iTunes Music Store more than ten years ago. He has produced or collaborated with some of the most popular artists in history, and been an important contributor to the success of the iTunes Store.”

Apple confirmed that the acquisition was not so much about the headphones – as many had pondered – but about the people behind the Beats Music streaming service. Despite having only a fraction of the streaming market today, Beats has tremendous potential, Cook believes.

“Beats Music was built with deep respect for both artists and fans. We think it’s the first subscription service to really get it right,” he said in his letter to employees.

Key to this high-quality offering is the curation team, which Apple is also taking aboard as part of the $3 billion / €2.2 billion deal.

“Both Apple and Beats believe that a great music service requires a strong editorial and curation team, and we will continue to expand what we do in those areas. The addition of Beats will make our incredible iTunes lineup even better, extending the emotional connection our customers have with music,” said the Apple CEO.

Cook confirmed that everyone coming over to Apple from Beats would be reporting directly to Cue, while Iovine and Dre will be offered offices at 1 Infinite Loop. Iovine will be a full-time staffer, but it isn’t clear if he’ll be commuting to Cupertino every day of the week, or whether he’ll be moving closer to the 1 Infinite Loop campus.

Only towards the end does Cook mention the Beats headphones, suggesting this is but an adjacent benefit of the costly deal that mostly focuses on the talent, not the hardware.

Image
“Beats Electronics has become the brand of choice for headphones and speakers in both the music and sports world, just five years after its launch. They are among the most popular and highest-rated third-party products sold today in Apple’s retail and online stores. We see an incredible opportunity to bring Apple’s legendary design and engineering capabilities to these popular products under Phil’s leadership,” said Cook.

In other words, expect the iPhone 6 to ship with an all-new pair of headphones. Same goes for the iPod line. Cook ends the letter by asking everyone to join the Beats team with arms wide-open, adding, “I hope you are as excited as I am about this new chapter in our history.”

See the related stories below for everything else tied to the Apple-Beats acquisition.
Eddy Cue and Jimmy Iovine
3 photos
   Eddy Cue and Jimmy Iovine

Photo Gallery (3 Images)

Gallery Image
01
Gallery Image
02
Gallery Image
03
MORE ON THIS TOPIC
LATEST NEWS
HOT RIGHT NOW

1 Comment