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You are looking at the wrong part of Beats. I don’t think Apples cares much about the headphones; Apple cares about Beats streaming music service. And, if I were a betting man, I’d wager than the quality of Beats headphones is going to get a lot better with Apple in control. Also, as pointed out in a Salon article, Apple is able charge premium prices because their products are perceived as “cool.” I’m a bit too old for Beats headphones...or maybe not, since I’m the same age as Dr. Dre, but if you look at college age and younger kids today, you will see a lot of them with Beats. Whether you or I think so, Beats are cool to them and Apple wanted a piece of that cool pie.