 | |
| Company type | Subsidiary |
|---|---|
| Industry | Consumer electronics |
| Founded | 2006; 19 years ago (2006) inSanta Monica, California |
| Founders | |
| Headquarters | , United States |
Area served | Worldwide |
Key people | Matthew Costello (COO) |
| Products | |
| Parent | Apple Inc. (2014–present) |
| Website | beatsbydre |
Beats Electronics, LLC (also known asBeats by Dr. Dre,Beats by Dre or simplyBeats) is an Americanconsumeraudio products manufacturer headquartered inCulver City, California.[1][2] The company was founded in 2006 by the music producerDr. Dre and record company executiveJimmy Iovine. Since 2014, it has been anApple Inc. subsidiary.
The subsidiary's product line is primarily focused onheadphones andspeakers. The company's original product line was manufactured in partnership with the AV equipment companyMonster Cable Products. Following the end of its contract with the company, Beats took further development of its products in-house. In 2014, the company expanded into the online music market with the launch of a subscription-based streaming service,Beats Music.
In 2011,NPD Group reported that Beats' market share was 64% in the U.S. for headphones priced higher than $100, and the brand was valued at $1 billion in September 2013.[3][4]
For a period, the company was majority-owned by the Taiwanese electronics companyHTC. The company reduced its stake to 25% in 2012, and sold its remaining stake back to the company in 2013. Concurrently,the Carlyle Group replaced HTC as a minority shareholder, alongside Dr. Dre and Iovine in late 2013. On August 1, 2014, Apple acquired Beats for $3 billion in a cash and stock deal, the largest acquisition in Apple's history.
Beats was established in 2006 by music producerDr. Dre and record company executiveJimmy Iovine.[citation needed] Iovine perceived two key problems in the music industry: the impact ofpiracy on music sales and the substandard audio quality provided byApple's plastic earbuds. Iovine recalled that Dre said to him: "Man, it's one thing that people steal my music. It's another thing to destroy the feeling of what I've worked on." Iovine sought the opinions of musicians with "great taste", such asM.I.A.,Pharrell Williams,will.i.am, andGwen Stefani during the early developmental stage.[5] Beats initially partnered with inventorNoel Lee and his companyMonster Cable, an audio and video component manufacturer based inBrisbane, California, to manufacture and develop the first Beats-branded products, and debuted its first product,Beats by Dr. Dre Studio headphones, on July 25, 2008.
To promote its products, Beats primarily relied on celebrity endorsements bypop andhip-hop music performers, includingproduct placement withinmusic videos, and partnering with musicians and other celebrities to developco-branded products.[5][6][7][8] Beats' use ofendorsements by musicians helped the company aggressively target theyoung adult demographics.[9]
In August 2010, mobile phone manufacturerHTC acquired a 50.1% majority share in Beats for $309 million. The purchase was intended to allow HTC to compete with other cellphone makers by associating themselves with the Beats brand,[10] as the purchase also granted HTC exclusive rights to manufacture smartphones with Beats-branded audio systems.[11] Despite its majority acquisition, HTC allowed Beats to operate as an autonomous company.[11]Luke Wood, who became President of Beats in May 2014, joined the company in January 2010 when it was still a "licensing business." Prior to this, Wood had worked under Iovine atInterscope Records.[12]
On January 19, 2012,BusinessWeek reported that Beats and Monster would not renew their production contract and their partnership ceased at the end of 2012. Dre and Iovine subsequently decided to oversee the entire operation of the company, from manufacturing to R&D,[12] and aimed to double its workforce to around 300 employees. Monster would ultimately begin marketing its own competing line of premium headphones aimed towards an older demographic.[6] At the time, neither Dre, Iovine or Wood were experienced in the operation of a company at such a grand level, but Wood explained in 2014:
I didn't have manufacturing experience, but I had experience of building something from scratch… Every time we put out an album, it was basically like building a new business--a unique cast of characters, unique challenges and opportunities, and trying to figure out a unique path to market.[12]
In October 2012, Beats unveiled its first two self-developed products, "Beats Executive" headphones and "Beats Pill" wireless speakers—Iovine believed that the company would now have to "control [its] own destiny" in order to continue its growth. Iovine also commented on how other headphone makers had attempted to emulate Beats' celebrity endorsement business model (including Monster themselves, who unveiledEarth, Wind and Fire andMiles Davis-themed headphones at the 2012Consumer Electronics Show),[6] stating that "some of our competitors are cheap engineers who have never been to a recording studio. You can't just stick someone's name on a headphone that doesn't know anything about sound."[6][13][14] Following the decision to transform Beats into an autonomous entity, the company's revenues reached the $1 billion mark, according to Iovine.[12]
In July 2012, HTC sold back half of its stake in Beats for $150 million, remaining the largest shareholder with 25.1 percent.[15] The sale was intended to provide "flexibility for global expansion while maintaining HTC's major stake and commercial exclusivity in mobile".[10] In August 2013, reports surfaced that Beats' founders planned to buy back HTC's remaining minority stake in the company, and pursue a new, unspecified partner for a future investment.[16][17]
On September 27, 2013, HTC confirmed that it would sell its remaining stake in Beats back to the company for $265 million. Concurrently, Beats announced that theCarlyle Group would make a $500 million minority investment in the company.[18][19] The overall deal valued Beats Electronics at $1 billion[3] and helped HTC turn anet profit of $10.3 million for the fourth quarter of 2013, following HTC's first quarterly loss in company history.[20]
The appointment of a newchief operating officer (COO), a role previously filled by Wood,[12] was announced in early November 2013. Matthew Costello, formerly ofIKEA and HTC, was formally appointed to the role in May 2014.[21][22]
On January 21, 2014, the company launched Beats Music, a subscription-based online music streaming service.[23] Prior to the launch of the service, Beats stated that it intends to provide a different type of streaming experience to what was available on the market at the time. Additionally, the service would only be available to consumers in the U.S. at inception.[24]
On May 8, 2014, theFinancial Times reported thatApple was in negotiations with Beats to purchase the company for $3.2 billion—the largest purchase in Apple's history and well ahead of its $429 million purchase ofNeXT in 1996.[25] The impending deal was prematurely and indirectly revealed in a photo andYouTube video posted toFacebook byTyrese Gibson on May 8, 2014; the video documented a celebration in which Gibson and Dr. Dre made boasting remarks about the acquisition, with Dre declaring himself the "first billionaire in hip hop", while Gibson declared that the "Forbes list" had changed. Both the photo and video were removed from Facebook the following morning, but both remain on Gibson's YouTube channel.[12][26] Indeed, analysts estimated that the rumored deal would make Dr. Dre the first billionaire in the hip-hop music industry in terms ofnet worth, assuming that he held at least 15% ownership in the company prior to the deal. Dr. Dre was listed with a net worth of $550 million onForbes'The World's Billionaires 2014 list. It was also estimated that theCarlyle Group would receive a profit of $1 billion from the sale of its minority stake in the company.[18][27][28]
On May 28, 2014, Apple officially announced its intention to acquire Beats Electronics for $3 billion—with $400 million to be paid in Apple stock and the remainder in cash. Some reports suggested that the reduction in value may have been a result of lower-than-expected subscriber numbers for the Beats Music service.[12] Iovine felt that Beats had always "belonged" with Apple, as the company modeled itself after Apple's "unmatched ability to marry culture and technology". In regard to the deal, Apple CEOTim Cook stated that "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." Beyond stocking Beats products at itsretail outlets, Apple did not provide any further indications over how Beats would be integrated into its product line at the time, and whether Beats Music, which competed with Apple's owniTunes Radio service, would continue to operate after the acquisition.[29][30][31]
The acquisition closed on August 1, 2014. Dr. Dre and Iovine were hired as executive employees,[32][33] and worked at Apple for years afterward.[34] To eliminate redundancy, Apple planned to lay off 200 workers from Beats' workforce of around 700.[35][36] Beats Music was discontinued effective with the launch ofApple Music on June 30, 2015.[37][38]
Apple hired British designerSamuel Ross for the newly created role of "Principal Design Consultant for Beats" in 2023.[39][40]
In July 2014,Bose Corporation sued Beats Electronics, alleging that its "Studio" line incorporatednoise cancellation technology thatinfringed five patents held by the company. Bose has also sought an injunction which would ban the infringing products from being imported or sold in the United States.[41][42] The lawsuit was settled out of court. Apple pulled all Bose products from its retail outlets, although it is unclear whether it was in response to the lawsuit, anambush marketing conflict involving Beats and theNFL (which had recently named Bose as one of its official sponsors, and thus fined a player for displaying the Beats logo during an official activity), or as a result of Apple's acquisition of Beats.[43] However, two months later, Bose products returned to the shelves of Apple Stores. The companies settled in October 2014: details were not disclosed.[44]
In January 2015,Monster Inc. sued Beats forfraud, alleging that the company had used illicit tactics to force Monster out of the venture while retaining rights to the technologies and products that it had co-developed, and engaged incollusion to harm Monster's own audio products business. Monster argued that the acquisition of Beats by HTC and its founders' subsequent buyback was a "sham" to take control of Monster's stake in the company—which could have been valued at over $100 million in the Apple purchase, that the company had "concealed" the role of Monster and its CEONoel Lee in the design and engineering of its products, and that "had the partnership expired on its own terms, there would have been no transfer of Monster's years of work [onto the company]". Monster also alleged that Beats had partaken inanti-competitive practices with retailers to force those offering Beats products to not offer Monster's competing products.[45][46][47]
In June 2015,The Wall Street Journal reported that in retaliation for the lawsuit, Apple Inc. revoked Monster's membership in theMFi Program on May 5, 2015, meaning that Monster can no longer manufacture licensed accessories foriPhone,iPod andiPad products, and must cease the sale of existing licensed products that contain the certification or technology licensed through the program by September 2015.[48]
The case was dismissed in August 2016, with a Supreme Court ruling that Beats "had the right to terminate the agreement as of January 7th, 2013 or when there was a transaction resulting in a change of control of Beats", and that Monster "did not obtain the right to approve the change of control. Nor did the agreement require that any change of control had to be objectively reasonable".[49]
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Beats' original product line wereBeats by Dre headphones. In promotional materials, Dre outlined the line's advantages by alleging that listeners were not able to hear "all" of the music with most headphones, and that Beats would allow people to "hear what the artists hear, and listen to the music the way they should: the way I do". In comparison to most headphones,Beats products were characterized by an emphasis towards producing larger amounts ofbass, and are particularly optimized towardship-hop andpop music.[4][50][51] In October 2012, Beats unveiled its first two self-developed products, the Beats Executive noise-cancelling headphones (to compete with similar offerings byBose andSennheiser) and theBeats Pill portable speaker.[6][14] In October 2015, Beats launched a new collection of speakers including the upgraded Beats Pill+ Speaker.[52]
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The Beats Solo Pro is an on-the-ear style headphone. Along with the Powerbeats Pro true-wireless earphones, they are part of a new generation of Beats products made from the ground up with Apple. They are the first on-ear headphones made by Beats to featureactive noise canceling. They were sold alongside the Solo 3 until November 1, 2021.[53]
The Beats Solo 3 Wireless is an on-ear style headphone. It can last for 40 hours on a single charge or indefinitely when plugged in via the headphone jack.[54] It has aMicro-USB connector for charging.[54]
Released in October 2017, these are high-end headphones produced until 2023, when they were replaced with the Beats Studio Pro. They connect by Bluetooth and have 40 hours of battery life, with 22 hours of battery life with adaptive noise cancelling on. They feature Apple'sW1 chip for quick connection to Apple devices runningiOS 10,macOS Sierra, orwatchOS 4 or later. They also feature pure adaptivenoise cancelling technology, which uses microphones both inside and outside the ear cups to measure sound levels based on the environment. If there is any headgear or eyewear on the user's head, it calibrates the noise cancelling and volume level accordingly. The headphones come in a wide range of colors and editions, including black, blue and special collections such as the"NBA Collection".
Released July 19, 2023, these are high-end headphones which feature noise cancellation, transparency mode, and are the first Beats to feature USB-C and Loseless Audio through USB-C connections. They also feature Personalized Spatial Audio and is compatible with Find My. They start at $349 in the US and work with Android 10 and later and iOS 16.5 and later.
Released May 2, 2024, the Beats Solo 4 are wireless on-ear headphones. They feature Personalized Spatial Audio with dynamic head tracking and lossless audio via USB-C or a 3.5mm cable. With up to 50 hours of battery life, they also give 5 hours of playback with a 10-minute charge. These headphones are compatible with both iOS and Android.
On September 7, 2016, Powerbeats³ were released. On February 10, 2017, BeatsX neckband-style headphones were released.[55] Powerbeats Pro were released on May 10, 2019, in the United States and 2 weeks later for UK and Europe.[56] The latest iteration of Powerbeats was released on March 18, 2020, sharing design concepts similar to that of the Powerbeats Pro from the year prior.[57] On October 14, 2020, Beats Flex neckband-style headphones were released as the evolution of BeatsX.[58] On June 14, 2021, Beats Studio Buds were released, and priced at US$149.99.[59] On November 5, 2021, the Beats Fit Pro were released, featuring a novel "wingtip" earbud design to enhanced stability during fitness workouts. On May 18, 2023, Beats Studio Buds Plus were released as a sequel to the original Beats Studio Buds. On February 11, 2025 Powerbeats Pro 2 were released, featuring Heart Rate Monitoring for Workouts.[60]
In 2012, Beats introduced their first speaker product, the Pill. In 2013, the Pill was replaced by the Pill 2 and a larger model, Pill XL, was introduced. The Pill XL was recalled and discontinued in mid-2015 due to battery safety concerns.
The Pill 2 had a number of accessories available, including a bike mount and a speaker stand - the "Dude" - shaped like a small wide-mouthed person. The Pill 2 was replaced by the Pill+, which was introduced in late 2015 and was discontinued in early 2021.
The company has also licensed the Beats brand, under the nameBeats Audio (stylized in lowercase asbeats audio), and technology to other manufacturers. In 2009,HP began to offerpersonal computers equipped withBeats Audio systems, beginning with itsHP Envy line.[61] The system features a softwareequalizer with a preset that HP marketed as being optimized for higher quality sound output.[62] Beats Electronics ceased its partnership with HP following its purchase by Apple Inc.; HP subsequently entered into a similar agreement withBang & Olufsen.[63]
Following its acquisition of a stake in the company, most new HTC smartphones began to be released with Beats Audio software, beginning with theHTC Sensation XE/XL with Beats Audio in September 2011.[64] The software was to be included in most new HTC devices, such as theOne series.[65][66] The Sensation XE and Rezound were also bundled with Beats by Dre earbuds, but HTC abandoned the practice on future devices. An HTC product executive claimed that despite the prominence of the Beats brand, "an accessory like the headphone doesn't factor in when someone is buying a smartphone".[67]
In 2011, Beats reached a deal withChrysler LLC to feature Beats-brandedaudio systems in its vehicles. First under the partnership was its2012 Chrysler 300S Luxury Car, which included a 10-speakerBeats by Dr. Dre sound system.[68] Beats audio systems are also available in brands includingDodge andJeep vehicles.
Other automobile brands that have Beats audio systems available in their vehicles includeFiat,Volkswagen andSEAT.[69]
On July 2, 2012, Beats announced it had acquired theonline music serviceMOG, in a purchase reported to have been between $10 million and $16 million. Beats stated that the acquisition was part of the company's goal to develop a "truly end-to-end music experience". The acquisition did not include the company's blog and advertising network, the MOG Music Network,[70][71] which was sold in a separate transaction to the broadcasting companyTownsquare Media in August 2012.[72]
While MOG indicated that it would continue to operate independently with no immediate change in service,[71] Beats subsequently announced a new subscription-based online music service, known asBeats Music, which launched in January 2014. In comparison to its competitors, such asSpotify andGoogle Play Music, the service emphasizes recommendations by music professionals alongside algorithmic recommendations.[23][73] MOG was shut down on May 31, 2014, and existing users were directed to Beats Music.[74] Beats Music was in turn replaced byApple Music in June 2015; the service also incorporated a Beats-branded online radio station, called "Beats 1", but the name was later changed to "Apple Music 1".[37][38]
In May 2021, Apple announced spatial audio withDolby Atmos support. Apple Music will automatically play Dolby Atmos tracks onAirPods,AirPods Pro,AirPods Max, and all Beats headphones with anH1 orW1 chip.[75]
Some critics claim that Beats products emphasize appearance over quality and function, arguing that more durable and better-sounding products are available for the same price or lower.[76][77] Tests done on an HTC smartphone with Beats Audio indicated that the audio technology is a combination ofaudio equalization that boosts the low (bass) and high ends of the audio range,audio compression, andaudio amplification.[78] In 2015, Beats presidentLuke Wood disagreed with accusations that Beats' products were "bass heavy", citing that their products were not for reference but rather for playback.[79]
In April 2014, German consumer test organisationStiftung Warentest tested 20 headphone models, including the productBeats by Dr. Dre Solo HD. In the end, it came in third to last. The comparatively high price, the merely satisfactory sound quality and the poor performance in the drop test were criticized.[80]
Apple said in a statement to Reuters. "After working with him for a year and a half, we have every reason to believe that he has changed."
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