The headphone maker and music-streaming service provider Beats Electronics is to be bought by Apple in a deal worth $3bn (2.2 billion euros).
Beats co-founders – music producer Jimmy Iovine and hip-hop star Dr. Dre – are to join the technology firm as part of the deal.
The move is Apple’s largest purchase to date and is a departure for the company which usually develops its own new products in-house, or makes much smaller acquisitions.
However, the price tag is tiny considering Apple’s roughly $150 billion (110 billion euros) cash hoard.
Apple will gain a line of “cool” headphones popular with a young urban demographic, but industry executives say the company was most impressed with Beats’ five month-old music service.
In addition Iovine and Dre are thought to be key in forging relationships with an industry that historically has viewed Apple with suspicion.
Analysts say the iPhone maker has to make better headway in music-streaming subscription services, a market expected to eclipse song downloads in the long run.
Streaming subscriptions jumped 51 percent in 2013, downloads slipped 2.1 percent.