Apple-Beats $3 billion deal officially closed: What next?
Now that Apple has officially scooped up Beats by Dr. Dre and Beats Electronics in a lucrative $3.2 billion deal, the two will be married in a relationship based on content, hardware and cold hard cash. They may also face an impending Bose lawsuit together.
But will Bose be able to defend its alleged intellectual property from such a giant merger? Apple has a history with Bose, selling its products in its own Apple stores. That relationship will surely be strained now.
Apple's decision to purchase the company founded by music moguls Dr. Dre and Jimmy Iovine was a strategic one that focused on Apple's hunger to compete against other streaming services such as Pandora and Spotify. According to a recent Tech Times article, the EU approved of the deal and said that Spotify would not be significantly affected.
Part of the Apple strategy involves putting Ian Rogers, head of the Beats subscription service, at the helm of iTunes Radio to better marry the services from Beats and Apple, according to a recent report. But the streaming services don't seem to be as worried about this particular acquisition as is another company. That is the headphone manufacturer and developer, Bose.
Bose claims that Beats has infringed on its patent rights, using their patented noise cancelling technology. Bose has a 50-year history, but it doesn't seem to have the stellar marketing power that Beats does, with its star appeal from Dr. Dre. Celebrities endorse the Beats headphones, while Bose has traditionally targeted audiophiles and wealthy homeowners. Both products are quite expensive in regard to headphones prices.
Beats has made significant inroads and profits, considering it only entered the market in 2008, according to a report. Beats' annual revenue is estimated to be about $1.5 billion, compared to Bose's $3.3 billion.
Experts believe Apple will try to settle with Bose rather than deal with a lengthy legal battle. If Bose won, they could potentially get damages dating back up to six years, consistent with patent law in the U.S. Bose filed the complaint with the International Trade Commission.
Apple announced the Beats finalized deal on its website with a welcome message:
"Today we are excited to officially welcome Beats Music and Beats Electronics to the Apple family. Music has always held a special place in our hearts, and we're thrilled to join forces with a group of people who love it as much as we do. Beats cofounders Jimmy Iovine and Dr. Dre have created beautiful products that have helped millions of people deepen their connection to music. We're delighted to be working with the team to elevate that experience even further. And we can't wait to hear what's next."
Beats also made an announcement on its new website. Apple plans to lay off a couple hundred employees at Beats because of overlap between the two companies, according to one report.
Nine Inch Nails' Trent Reznor, a Beats executive, and Beats president Luke Wood also joins Apple with the acquisition.