[InclinedPlane]

I'd hardly describe it as genius. Apple saw an opportunity: a headphone maker with such a strong brand they can demand a 100-200% markup on their products and still maintain strong sales. Apple is also in exactly that same market, deciding to pickup Beats isn't genius it's obvious.

[adamlett]

Obvious? Maybe if the didn't have to pay anything for the company, it would be. But why is it obvious that this acquisition makes sense at that particular price? I'm not saying that it doesn't make sense, only that you have to at the very least consider how much the company is worth to Apple, before you declare it a no-brainer acquisition. Would it still make sense at $4B? $6B? How much would be too much before this is “obviously” a bad deal?

[InclinedPlane]

Beats has a marketshare of something like 2/3 to 3/4 for headphones over $100 and annual revenue of about $1.4 billion in 2013 (1/6 of Facebook's revenue). If anything, $3.2 billion was a steal.

[epo]

Citation required for such a handwavy assertion. Beats is a fashion brand and those are notoriously ephemeral. If Beats want to sell they may know the game is up, but then so would Apple.

[001sky]

Citation required for such a handwavy assertion

Fashion brands M&A all the time> https://en.wikipedia.org/wiki/LVMH > LVMH is a classic, diversified example.

Even apple is seen by many as a 'fashion accessory'> https://en.wikipedia.org/wiki/IPod_advertising#Silhouette_St...

They ran an entire marketing campaign based on the gratuitious display of earphone cords !!

[adamlett]

You mention marketshare, but neglect to mention the size of the market. You mention revenue, but neglect to mention profits. For all your numbers tell me, Beats could be operating at a loss in a shrinking market.

And I'm curious: If $3.2B was a steal, what would have been a fair price?

[nsxwolf]

To be fair, I didn't see you or anyone else predicting a Beats acquisition by Apple. So how obvious is it really?

[InclinedPlane]

So you're saying that acquiring an incredibly well-known high-margin manufacturer in the same market is in some way a completely surprising and non-intuitive decision?

[nsxwolf]

No, not at all - but I don't think that is the same thing as "obvious" the way that word is usually used.