Apple set to buy Beats for record deal of $3.2bn

Apple — which has its European headquarters in Cork — is close to paying a record $3.2bn (€2.3bn) for Beats Electronics, which also has a Cork link.

Founded by rapper Dr Dre and legendary music producer Jimmy Iovine, Beats Electronics is best known for its ‘Beats by Dr Dre’ line of headphones.

Dr Dre, who founded pioneering rap group NWA in 1986 and helped launch the careers of Eminem and 50 Cent, has for the last two years based three of his companies in Clonakilty to avail of Ireland’s generous corporate tax rate, thereby reducing his tax liability.

A source told Reuters that Apple was in the market for a subscription-based music service to complement its “iRadio” ad-based offering, launched in 2013 as part of an attempt to jump into a music-streaming arena then split between a handful of startups such as Pandora.

This year, Beats launched a music service that has won plaudits for its slick design and human music curation, as opposed to the computer-run algorithms that determine playlists for most of its rivals.

However, analysts asked whether Beats, valued at just $1bn during its last funding round in September, was worth that price. Apple had more than $130bn in cash as of the end of March.

Apple-watchers have speculated that the company that upended the music industry — and today is the single largest seller of songs — was contemplating a Spotify-like on-demand music service to go with iRadio service and iTunes.

“This is really puzzling. You buy companies today to get technologies that no one else or customers that no one has. They must have something hidden under the hood,” said Forrester analyst James McQuivey, who said there was huge overlap between the two companies’ customer base.

Apple declined to comment. Beats Electronics did not respond to requests for comment on the news, which was reported first by the Financial Times.

Apple has not made a billion-dollar acquisition in at least a decade. The firm prefers to develop and design its products in-house, though it has tended to pay several hundred million dollars for small but important bits of technology to propel its core consumer electronics business, such as the 2008 acquisition of PA Semi that led to the processor now found in all iPhones.

Apple has been under pressure to try to revitalise growth as iPhone sales slow. Critics have also accused the company of slowly “losing its cool” and innovative edge to new and upcoming technology companies, and missing the music-streaming bandwagon.

Betting on biotech

Apple is building a team of senior medical technology executives, raising hackles in the biotechnology community and offering a hint of what the iPhone maker may be planning for its widely expected iWatch and other wearable technology.

Over the past year, Apple has snapped up at least half a dozen prominent experts in biomedicine, according to Linkedin profile changes.

One prominent researcher moved two weeks ago, and Apple is recruiting other medical professionals and hardware experts, but the number of hires is not clear.

Much of the hiring is in sensor technology, an area chief executive Tim Cook singled out last year as primed “to explode”.

Industry insiders say the moves telegraph a vision of monitoring everything from blood-sugar levels to nutrition, beyond the fitness-oriented devices now on the market.

Apple is under pressure to deliver on Cook’s promise of new product categories this year. The company has not introduced a new product type since the iPad in 2010.