Cook calls Apple/Beats deal a no-brainer, Iovine and Dr. Dre to report to Eddy Cue

More information is becoming available following the announcement of Apple buying Beats for $3 billion, including Tim Cook calling the deal a no-brainer, and word that both Jimmy Iovine and Dr. Dre will be reporting to senior vice president of services, Eddy Cue. The New York Times:

In an interview here at Apple's headquarters, Timothy D. Cook, Apple's chief executive, repeatedly emphasized the talent that Dr. Dre and Mr. Iovine would bring to Apple. He also praised the Beats music service, which has people create playlists for people to listen to."These guys are really unique," Mr. Cook said. "It's like finding the precise grain of sand on the beach. They're rare and very hard to find."

The Wall Street Journal said Iovine will leave his job as Chairman of Vivendi's Interscope Records to work full time for Apple. Dre will continue to produce music as well as work for Apple. Both will spend as much time at Apple's Cupertino headquarters as necessary.

"The ugly truth is that there is such a Berlin Wall between Silicon Valley and L.A.," Mr. Cook said in an interview. "The two don't respect each other, don't understand each other."We think these guys have a very rare talent," Mr. Cook continued. "We love the subscription service that they built—we think it's the first one that really got it right."

Re/code interviewed Tim Cook:

But mostly, backing up — it's because we always are future-focused. So it's not what Apple and Beats are doing today. It's what we believe pairing the two together can produce for the future.Financially, it's great, because even in the short term there are synergies. Using Apple's global footprint, there's hitting the gas on the subscription service, there's distributing the headphones globally in countries that they're not in today. There's lots of things like that.So we're projecting it's going to be accretive in fiscal year 2015, which as you know for us, only starts in a few months.But the real thing that gets us excited is that feeling that you only get so few times, are the things that we can jointly do together, that neither company could do on their own.

Cook also admitted that, while Apple could certainly have built a Beats-like business themselves, getting Iovine and Dre, and getting a head-start by not having to build it themselves, was valuable.

It's official but that doesn't mean we'll know the extent of Apple's plans for the Beats brand, hardware, or services for a while yet.

What do you think they should do?

Rene Ritchie

Rene Ritchie is one of the most respected Apple analysts in the business, reaching a combined audience of over 40 million readers a month. His YouTube channel, Vector, has over 90 thousand subscribers and 14 million views and his podcasts, including Debug, have been downloaded over 20 million times. He also regularly co-hosts MacBreak Weekly for the TWiT network and co-hosted CES Live! and Talk Mobile. Based in Montreal, Rene is a former director of product marketing, web developer, and graphic designer. He's authored several books and appeared on numerous television and radio segments to discuss Apple and the technology industry. When not working, he likes to cook, grapple, and spend time with his friends and family.

  • Leo oh Leo. :)
  • On the face of it, it looks like both an insult to Jony Ive's work and it illustrates Eddy Cue's weaknesses in developing relations in the music business. Two signs that are not good no matter how you look at it.
  • And the Beats headphone business will falling under Phil Schiller. So basically Apple is admitting Eddy Cue's weakness and that Apple is trying to buy cool. Now would be a good time for Jony Ive to retire. :)
  • Remember that before Jobs died, he said that he made sure that Jony Ive would basically be "unfireable"? Cook is circumventing Ive by buying someone else's massively successful design work. It's both an indictment and a slap in the face to Ive.
  • Quoting - "What do you think they should do?" Give us the option to choose Beats earbuds or Apple EarPods when buying an iPhone lol!
  • Apple is going to be hurting when the US Government turns off Unemployement benefits!
  • 3 Billion? WTF! Apple got Steve Jobs and Next for 400 Million and that was the deal of the century. These guys and Beats are nowhere as unique and I'm betting they will both be gone within a year. The headphones suck and they would have to pay me to use them.
  • Whether the product sucks or not, they have great marketing and their headphones sell well. Its all about profit.
  • "A business that makes nothing but money is a poor business.”
    Henry Ford
  • Absolutely right.
  • I disagree. Their products suck (well maybe that's too harsh, but they are subpar for the high price tag). This is about Dre and Iovine's tie to the industry and the connections they can make ALONGSIDE hardware and this new app (if at all). I don't see Cook paying $3B for some "cool" headphones (that really aren't any better than Apple's EarPods) and a brand new app (that actually will still standalone) that really hasn't generated any real findings, such as user base and retention, profit, etc. this is Apple working behind-the-scenes to better negotiate with record labels with Iovine and Dre as weight due to those reports of declining music amongst consumers. I think the industry is relaxing the importance of subscription-based services (especially to "battle" piracy). Sent from the iMore App
  • Beats makes over a billion dollars in revenue per year and they have 64% of the headphone market. They don't need you to like them. Most people aren't buying what you want. They buy what Dre's making. Warren Buffett has some pretty basic criteria for what companies Berkshire buys, they are profitable, well run, and he understands the business. Beats is profitable and well run. now personally I think Apple will find a way to drive away any cool Beats had if it changes too much but that remains to be seen. But to Apple it's profit, plus they can take the beats music curation app and fold that into Apple's products or even sell it on other platforms too.
  • The Emperor's New Clothes?
  • The Emperor's New Beats.
  • I am still trying to get my head around this. If you are into serious music at all, beats earphones are all about looks not usable. They are poorly made over priced enhanced bass earphones. I would never use them for serious mixing. It is the look that sells them, not the specs. Streaming services are pretty much the same. Some are better than others, but all do the same thing. Three Billion? Wow. Dr Dre, and company are really smart at business. Sent from the iMore App
  • Apple is already vulnerable to the marketing-over-substance perception. What's next, a deal with Monster Cable? I really don't like this aquisition.
  • Dr. Dre, a hip-hop legend and Jimmy Iovine, a music company executive will "report" to Eddie Cue.... HAHAHAHAHAHAHAHAHAHAHAHAHAHA yeah right. I've been working for an international pharma company for 11 years and this is NOT how acquisitions work for executive staff. Incoming execs report to the CEO or no one. There is NO WAY they are going to go from being in charge of a company to reporting to someone who reports to the CEO. I give them both a couple months before they "leave for other opportunities".
  • I have some magic seeds to sell also, they make the sound amazing, and they grow beets! Only 500 dollars, and I have a know nothing artist to back up my claims! Sent from the iMore App