The genesis of the Apple + Beats tie-up: Beats Music
With Apple's rumored multi-billion-dollar purchase of Beats still leading to scratching of heads, we might have an idea of what Tim Cook and company are after in the purchase: Beats Music. Of course, there's nothing official about any of it yet. Apple's own streaming iTunes Radio services hasn't taken off as well as Apple or the music industry would have liked, apparently they saw something they liked in Beats Music, something worth a $3.2 billion acquisition.
According to Bloomberg, it's exactly Beats Music that pulled the two together:
Apple became interested in doing a deal with Beats after executives were impressed by Beats Music, the online music streaming service unveiled earlier this year, which was rapidly converting users into paying subscribers, said a person with knowledge of the talks, who asked not to be identified because the discussions are private.
It's worth noting that while Beats might be impressive as a service, it's not yet found success in gaining a mass of users (most reports peg it at well under half a million). Though one could certainly say that being the lynchpin in a $3.2 billion purchase would be considered a success.
The successful half of Beats is their headphones business, which has been booming and profitable for several years. Speculation has mounted about what Apple would do with Beats, as Apple hasn't historically held subsidiary companies after acquisition (the primary exception being FileMaker. Bloomberg isn't clear on the fate of Beats' headphone business, but it seems it will remain a separate entity from Apple, though the parent company will lend some of their famous design expertise to Beats' future products.