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$1Bn Valuation For A Company That Makes Headphones

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http://www.theguardian.com/music/2013/sep/27/dr-dre-beats-1bn-carlyle-sale

Dr Dre's headphone company Beats Electronics has been valued at more than $1bn (£620m) following the sale of a minority stake in the business to private equity firm Carlyle Group.

Dr Dre (real name: André Romelle Young) is already one of the world's richest musicians, and is expected to pocket about $250m from the sale. Both Beats and Carlyle declined to say how much of the company he owned prior to the deal.

..

The firm, which primarily sells under the Beats by Dr Dre brand, has cornered the market in high-end headphones. Beats accounted for 64% of headphones selling for more than $100 in the US in 2012, according retail analysts NPD Group. The market for expensive headphones increased by 73% in 2012.

When Beats first entered the market rivals did not think the company had a chance of getting music lovers to pay more than £250 for headphones.

"People thought we were crazy," Beats chief operating officer, Luke Wood, told Time Magazine. "They said the marketplace would never support a $300 headphone."

..

Beats had sales of about $1bn last year

A $1bn for a company that produces headphones, must be a muggers dream people walking around with uber expensive headphones and ensuring they aren't heard or aware when crept up on.

An over priced status symbol that at some point the majority of people won't be able to afford?

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Well, much to my surprise they actually do MAKE the headphones, in California. I expected them just to be a brand marketing excericse with over-priced stuff knocked out in China like Apple et al. Who knows, the manufacturing facility might be worth, er, several $M.

I'm sure that the fashion for overly bassy music, knocked out by ne'er-do-wells in the' hood will persist for all eternity and the company will go from strength to strength.

On the other hand, someone might buy Cameron a pair and as soon as he's seen wearing them the company image will be toast.

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I bought a Linn Sondek LP12 30 years ago...surprised to see I can still buy one...Over £2000 now. ebay beckons.

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1380307970[/url]' post='909399963']

They are widely derided as crap too.

$300 would get you some beautiful cans and they wouldn't be by Beats.

I have no idea if they justify the price, but I do know that my teenage son thinks they're very cool. I've tried some that have amazed me, but there's no way I could part with anywhere near that kind of money for headphones.

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I have no idea if they justify the price, but I do know that my teenage son thinks they're very cool. I've tried some that have amazed me, but there's no way I could part with anywhere near that kind of money for headphones.

Branding is very important for the teenager...if this brand is accepted by his mates, then the brand is cool...may be really poor value, but they wont take the micheal and he can be leader of the pack or at least a cool part of it for a while.

Personally, I have a pair of closed back, on ear sennheisers...amazing for £40...and because they are closed, I can where them without disturbing others.

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Branding is very important for the teenager...if this brand is accepted by his mates, then the brand is cool...may be really poor value, but they wont take the micheal and he can be leader of the pack or at least a cool part of it for a while.

Personally, I have a pair of closed back, on ear sennheisers...amazing for £40...and because they are closed, I can where them without disturbing others.

wonder if the headphones will go the same way as the last headphone craze about 25 years ago, cool for a couple of years and then you see the nutters riding around on old bikes with them on a few years later on..

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If doesn't say how much profit the company made last year, however it sold 1 billion worth of headphones, and I would imagine the margin would be high. They could have easily made over 100 million profit last year, which would make a billion for the whole company a 'fair' price. We can say it is not sustainable and some others would argue that it might sell 2 billion worth of headphones next year, but IF the p/e was 10 it would be far from exorbitant.

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To be fair £1 headphones are dire. They buzz and rattle. You do need to spent a bit more. I bought an expensive pair not because the sound is any better but because some of them are very comfortable.

It is a very strong brand and the cash is guaranteed. Very high margin products. Have been a saviour for high street electronics shops.

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Is this just style over substance? I'd rather have Audio Technica or Sennheisser! :blink:

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wonder if the headphones will go the same way as the last headphone craze about 25 years ago, cool for a couple of years and then you see the nutters riding around on old bikes with them on a few years later on..

yes, where are Koss these days..they were the Dogs Testicals when I were a lad. I was delighted to get my first Koss On ear (HV1-LC?), the first headphones that I had that didnt sound like shoeboxes...then saved up for the self charging ESP..something or other..heavy and sounded better, but relied on volume to keep them charged up...on some quiet music they would just about turn themselves off....

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Is this just style over substance? I'd rather have Audio Technica or Sennheisser! :blink:

They are actually decent enough headphones, however there is a style premium on top. Much better sound quality than they are generally given credit for.

You can get better headphones cheaper (but not cheap), but that is only half the point of them. Same as buying a pair of Nike trainers, you can get a pair of basic trainers in Primark for £8 or so, you put both on your feet and walk around (not talking proper running shoes).

People would rather have sound good/look good than sound amazing/look average, most people wouldn't know the difference sound quality wise anyway and certainly not walking down the local high street with plenty of other noise going on. Half electronic equipment, half fashion statement.

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Bass music will be mixed and mastered on expensive gear to be very bassy. Why you want bass-heavy cans I have not idea - you just get that farty throbby feel. It's like squirting ketchup on a posh dinner.

You just want the most neutral, detailed headphones you can afford to get as close to what the mixing and mastering engineers heard on their speakers as you can.

I listen to music on recording-orientated KRK monitor headphones - they're kind of heavy and sweaty for very long sessions but no music ever sounds wrong.

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