Apple-Beats Deal: Headphones, Cool Factor, Talent

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May 29 (Bloomberg) -- Bloomberg Contributing Editor David Kirkpatrick explores the reasons why Apple pursued Beats Electronics as it brings in headphones and streaming media in a $3 billion deal and what Dr. Dre and Jimmy Iovine brings to the table for Apple. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

Final price tag, $3 billion.

This is apple's largest acquisition ever.

It had been telegraphed.

The stock is up 4/10 of 1%. with this purchase, they will gain control of beats head pho nes.

Let's check in with david kirk patrick, who joins us with his reaction.

This deal was weeks in the making.

The price tag is lower than originally reported.

It is funny.

Even though music is really what got apple on the trajectory it has taken, it has gone to this extraordinary scale and success.

They have never done headphones well, which is interesting.

They even have a policy that if you go in and have a broken headphone, they replace it for free.

They know their headphones are so bad.

Ironically, that is not being discussed.

They need better headphones.

They also need a broader market positioning among young people.

Many of them perceive apple as an old person's product.

I think it is probably a smart move to broaden their market share and get into an area that is critical for a heavily music oriented company.

Bring in some intellectual creativity.

Also, it is chump change for them.

They are only laying out $2.6 billion.

You mentioned they are buying hardware.

What about the fact that this is a talent play?

What can that mean for apple in the next six months?

I was just thinking about getting on to talk to you and i was reading about jimmy and all of the records he has produced.

One of the pretenders' great a lbums.

A classic by meatloaf.

He has an incredible sense of what people want.

I don't think he is a steve jobs, but from an intuition point of view, he is somebody who gets how people think.

He can make classic products.

He is going full-time to apple.

Is a music producer and executive, but i think somebody like that could add a lot to the culture of apple.


dre is also a great artist.

He is not is clearly going full-time, but i'm sure he will add a lot as well.

I understand what apple is getting.

I think about the artists.

They will make 1/5, 1/6, 1/7 the amount of money that they would have gone from downloads.

Is that sustainable long-term?

That is a debated qu estion.

Now you're getting into the music service.

I do think it has to be.

Frankly, this is the way we are all getting our music.

We're not going back to buying cds.

If we cannot figure out a way for the artist to make money, the music industry is doomed.

I do not think it will be doomed.

Music is too big a part of culture for that to happen.

Prices might go up.

That would be good for apple.

I don't think we will keep buying songs.

By the song on itunes.

The strength of the facebook effect was being able to look forward to where we go.

Our member the first time i heard stereo crystal clear.

Reach forward -- where will this transaction be in five years?

Is a great way to ask question.

I think quality of music is going to be affected by this and a number of other trends.

We have gotten used to getting our music with convenience.

In the process, we have sacrificed the quality of the audio.

For someone like you, i am sure it has been acutely painful.

I think the chances are good that this will lead apple to concentrate more on the quality.

Thank you so much.

David, joining us from crete.

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


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