Tim Cook, Jimmy Iovine, and Dr Dre talk next steps in Apple Beats buyout
Beats Music and Beats Electronics has been bought by Apple, but what happens now? Some details have already started to surface following a series of interviews with Dr. Dre, Jimmy Iovine, and Tim Cook on the news, but while the dust settles, here's what we know, what is likely to happen next, and what's probably out of the question.
What Dre, Iovine, and Cook have said so far
As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. According to The Wall Street Journal, they will be simply known as "Jimmy and Dre" at Apple.
Iovine has said that he would leave his post as chairman of Interscope Records and will work full-time at Apple presumably helping them to further ink deals with the music and film studios.
Dr. Dre told The Wall Street Journal that he would continue to produce music but do "as much as it takes" for Apple.
We also know that Beats Music will still be available on Android and Windows Phone after the deal, according to Tim Cook talking to the FT - telling them "It’s all about music."
Furthermore, although the headline price tag is $3 billion, the deal includes a $400 million vested amount, which, although not stated, is likely to include targets and support from Iovine and Dr. Dre over the next couple of years. That's good news for Apple, because it means that the pair will still want to be heavily involved to make sure it is a success and that they get that final $400 million.
Apple has told the The New York Times that "The Beats brand will remain separate from Apple’s, and Apple will offer both Beats’s streaming music service and premium headphones."
The New York Times also states, Cook telling them, that "Mr. Cook said that Dr. Dre and Mr. Iovine would be working with Apple on the next generation of music offerings, but declined to share details about future products." It added: "They’re going to be coming up with ways of features that blow your mind," he said, "and products you haven’t thought of yet, and seeing around the next corner to articulate the way to take music to an even higher level than it is now."
What is likely to happen next
Apple has bought Beats for the headphones, because according to an internal memo from Tim Cook, Apple's CEO to Apple staff on the acquisition: "They are among the most popular and highest-rated third-party products sold today in Apple’s retail and online stores."
It's bought the streaming music service which Cook also believes is "the first subscription service to really get it right" and therefore likely to continue to push that.
In an official statement, Eddy Cue, Apple’s senior vice president of Internet Software and Services, stated that:
"Music is such an important part of Apple’s DNA and always will be" and that "the addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years."
Expect Apple to start pushing both Beats headphones and the streaming music service to its customers in the near future.
What's probably a long shot
There are a number of guesses as to what is going to happen after the deal, but some, whilst probably wanted, are unlikely to happen, especially straight away.
Apple is unlikely to start bundling Beats headphones with every purchase of an iPhone, iPad, or iPod. It makes good money from its cases division, and from what it has said about how well Beats headphones sell, it is unlikely to suddenly start giving them away for free.
We could see Beats Audio technology worked into future Apple products in the same way we saw that with HP laptops and HTC phones in the past, but we don't believe it will happen immediately and certainly unlikely in the 2014 models - iPhone 6 and iPad 5. Never say never of course, but we suspect it will be too soon even for Apple.
Beats music is unlikely to be folded into iTunes either. Apple has bought the company because of the people (Dre, Iovine, and the team are moving to Apple) but also because of the strong Beats brand. Now it also has a strong music subscription service and a strong music-buying service.