What's the Next Episode for Apple with Beats?

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May 29 (Bloomberg) -- Cantor Fitzgerald’s Brian White and Moody’s Senior Analyst Gerry Granovsky examine the cost of Apple’s $3B purchase of Beats and the headset business. They speak with Trish Regan and Cory Johnson on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Editor at large.

$3 billion, i know it's not a lot of money for a company like apple with all the cash they have on hand.

Did they overpay for beats?

The software business is interesting, but $3 billion interesting?

That's a great question.

You can sort of see apple looking backwards and saying were going to sell a lot of headphones anyway, they sell so many of them in the apple store.

But i think the business they really want to get up top -- get on top of is the streaming business.

Beats has 200 50,000 people subscribing to the service.

They have the deals in place with the music labels to get that music into their servers.

Apple acquiring that, it could really accelerate growth and change the entire digital music.

There's a lot of potential here.

This is what apple is banking on.

They could have gone out and got, say, spotify for the same amount of money and earned itself a whole lot more users.

Why go for beats?

A lot of people are scratching their heads, but i don't think it's that complicated.

Apple built this business, that's how it all started, ipods, itunes.

Jimmy iovine and dr.

Dre bring a lot of credibility to this business.

When you look at headsets, at the end of the day it's actually a basic business.

What does it mean for the headset business?

Apple is a brand unto itself.

It doesn't need beats as a brand to represented.

Will they relabel the headphones, do you think?

Initially, i don't think they are.

You are right, it is a sea change in the way the company has gotten acquisitions in the past.

It is not in apple's interest to change the name, at least not in the near term.

You said it, it's a departure from what we have traditionally seen.

Does this mean tim cook is going to have a different strategy overall, looking for acquisitions, and if so, what kind?

I don't think it would change his strategy.

I think it fits with things they already do.

It really supports the music ecosystem that is imperative to apple to keep the ecosystem together.

It shows you how quickly things can change in silicon valley.

Blackberry of course comes to mind.

Itunes comes to mind.

There's a time when itunes was everything with the ipod.

The business was built on it.

It effectively disappeared overnight as people turn to renting instead of owning their music.

Why did men change the itunes platform to make it more popular?

-- why didn't they change the itunes platform?

Greg using the silhouette of a person dancing to music and all you could see were white earbuds dangling.

Now the dominant coolest brandon all of the headphone business, you see: kaepernick walk into a stadium wearing their beats headphone, the noise canceling headphone.

That is the cutting edge in that business in terms of style and cool factor.

Apple didn't have it anymore, but they bought it yesterday.

A really interesting deal.

We will see how it all plays

This text has been automatically generated. It may not be 100% accurate.

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