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Beats me: 5 reasons Apple shouldn't spend $3.2bn on Beats

James Temperton
9 May 2014
Beats Music
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Apple is poised to spend $3.2bn - but here's five reasons why it should save its money

Apple could complete its biggest ever acquisition when it gobbles up Beats for a whopping $3.2bn (£1.9bn), but the reported deal has left many puzzled. The Cupertino-based giant isn't known for big-money deals, so why is it prepared to pay so much for Beats? Here are the five most compelling reasons for Apple to keep hold of its money.

1) The headphones aren't very good

In somewhat timely fashion, we published our review of the latest Beats By Dr. Dre Studio headphones earlier today. At £270 these massive cans will leave an even bigger hole in your wallet. Beats Studio are well-made headphones with great audio quality, but they're also very obviously engineered to sound a certain way. And that way is very heavy on the bass. Fans of classic rock, folk and classical music probably won't be too happy with what these headphones do to familiar recordings. And that's a common complaint for all Beats headphones – overpriced and heavy on the bass.

2) Beats and Apple don't go together

Apple is known for premium quality products at a premium price. While the price of Beats headphones is high enough, the quality is lacking. Beats are flashy, bold and covered in glossy plastic. Apple products such as the iPhone and Macbook Air are all sleek lines and aluminium. The two brands sit uncomfortably together and it is hard to imagine the Beats name surviving a takeover by Apple. Having Beats plastered all over HTC smartphones was fine – but an iPhone? No thanks.

3) Ever heard of Beats Music streaming?

Some have speculated that Apple's main interest in Beats is its Beats Music streaming service. Launched in January 2014, it has a library of more than 20 million songs that can be streamed by users on-demand. People can also download songs for local playback, with a subscription costing $9.99 a month of $119.88 per year. Then there's the spookily similar iTunes Radio, which was launched by Apple in September 2013.

4) Apple doesn't do big acquisitions

Despite gobbling up 24 companies over the past 18 months, Apple has tended to stay away from headline-grabbing acquisitions. While the company undoubtedly has money to burn – it is currently sitting on a cash pile of $133bn – it has been reluctant to spend it. If it goes through, Apple's deal to buy Beats would be its biggest ever acquisition – the second biggest happened in 1997 when Apple bought NeXT for $400m.

5) 'Cool factor' isn't worth $3.2bn

Apple is a company based on image. Apple stores, Apple products and Apple marketing campaigns are all based on the lifestyle that the company has successfully sold since the iPod first appeared in 2001. While other companies might be glad to take the marketing boost that a brand like Beats would bring, it doesn't make sense for Apple. Unless it values the Beats Music streaming service at $3.2bn, then Apple is either paying way over the odds for a headphone company or Beats is working on something that the world doesn't know about yet.

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