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Apple/Beats Deal Sparks Tons Of Speculation

CUPERTINO, CALIF. — Apple’s long-rumored acquisition of Beats Electronics drew plenty of speculation about music streaming and how the two will work together.

Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time, it said. The transaction is expected to close in the fourth quarter. Beats Electronics had estimated worldwide sales of more than $1.5 billion in 2013, according to Futuresource Consulting, and The NPD Group said it captured 28 percent of all U.S. headphone sales that year.

A joint statement from the companies said Beats cofounders Jimmy Iovine and Dr. Dre will join Apple.

Apple CEO Tim Cook said, “Music is such an important part of all of our lives and holds a special place within our hearts at Apple. That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”

Iovine added, “I’ve always known in my heart that Beats belonged with Apple. The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”

TWICE inquiries to Beats on how the move will affect the rest of Beats personnel were unanswered at press time.

The announcement, which drew scads of speculation when the Financial Times first leaked the potential news weeks earlier, was scrutinized by analysts before and after the deal was officially announced. Ben Arnold, Ben Arnold, executive director, industry analyst, of The NPD Group, suggested to TWICE that Apple could be making the deal to create an entire “music ecosystem” for consumers, similar to the one Sonos has. This would enable Apple to leverage its App Store in a new space, as well as give it a presence in a category it doesn’t currently have: headphones, portable speakers and soundbars.

It could also be about control, Arnold said, controlling how the music sounds when it leaves the device and controlling the user experience.

Directly on the heels of the announcement was news from Beats that it had updated its Solo headphones. The Solo2 on-ear headphones have an updated design that mimics the Beats Studio build, the company said, with new visible screws in the construction. Beats also said it has updated the sound technology.

Features include angled ear cups with a new pivoting design, an in-line mic and remote, and a carrying case.

The Solo2 will carry a $199 suggested retail and will come in black, white, blue, pink and gray, with a Project Red version available. The first-generation Solo will continue to be sold, a spokeswoman told TWICE.

Apple wasn’t the only partnership Beats announced in May. It has teamed with Snarkitecture, an art-focused architecture firm, for a version of the Studio headphones. The Snarkitecture X Beats, available June 9 for a $600 suggested retail, features a completely matte-white design with no logos and is “accompanied by Snarkitecture’s famed Pillow made from white cultured marble,” said Beats.

Finally, two new colors were added to the Studio line: Champagne and Metallic Sky, both scheduled to be available this month.