Apple’s $3 billion acquisition of Beats breaks down as follows: Less than $500 million for the Beats Music streaming service, and more than $2.5 billion for the Beats Electronics hardware division.
Following Apple’s announcement of a blockbuster $3 billion Beats buyout on Wednesday, The Wall Street Journal reports most of the money is going toward Beats Electronics, which is responsible for headphones, speakers and other audio equipment.
The ever popular “source familiar with Beats’ operations” said the company’s sales totaled almost $1.5 billion in 2013. That all came from the hardware division. (Beats Music launched in January 2014.)
Apple basically overpaid for the Beats Music streaming service if you look at the from a standpoint of subscriber numbers. (250,000 subscribers isn’t much for half a billion in coin.)
The WSJ: “The valuation of the $10-a-month streaming service, which counts 250,000 paying subscribers, is generous based on its subscriber numbers. Spotify AB, which has 10 million subscribers world-wide, raised $250 million in November at a valuation of $4 billion, or $400 per subscriber. By that measure, Beats would be worth $100 million.”
However, Apple likely has bigger plans for the Beats music streaming software and service, so it’s “hide and watch” time to see what Apple does with their purchase.