Reports say Apple is buying Beats. Source: Beats.

I'll be honest: I didn't want to chime into this discussion. First of all, there's nothing definitive about Apple (NASDAQ:AAPL) shelling out $3.2 billion for Beats, the premium headphone maker and streaming music service. Besides, of course, an online video showing Dr. Dre -- the hip hop mogul who co-founded Beats -- talking about the acquisition and how he'll be the first billionaire in hip hop.

Right now, it's hard to see a huge upside to Apple purchasing the company (and I've said as much on Twitter), but still there are many making the case for such an acquisition.

Some have pulled out the crystal ball and are predicting how perfectly this matches up with Apple's long-term strategy or, even worse, have taken a trip in their time machine and pretended they've always thought this was a great move for Apple. Let's do neither and instead take a look at both the bull and bear cases for a Beats acquisition and all fess up that we really don't know what Apple's thinking.

Fair enough?

Pump up the jams
One analyst on the bull side is Steve Milunovich from UBS. He mapped out three potential benefits from an acquisition:

  • Purchasing Beats for $3.2 billion is a reasonable price, considering the company's annual revenue is about $1.4 billion and has high margins.
  • Apple could use Beats' music streaming service to "complement its mediocre success with iTunes Radio."
  • Beats headphones and designers could become a part of Apple's wearable technology future. 

He added, though, "Before formulating a strong opinion, it would be nice to hear Apple's rationale."

Apple already has iTunes Radio. Source. Apple.

Most of the bull cases surrounding the possible purchase reflect on the fact that though Apple iTunes Radio isn't a failure, it could be better. Beats audio costs $10 per month and doesn't have a free ad-supported version, while iTunes Radio is ad-supported by default but drops them with an annual $25 iTunes Match subscription.

With music being a big part of Apple's DNA, a Beats acquisition doesn't seem completely crazy, but there are still questions on how Beats' streaming service could significantly enhance Apple's iTunes, considering that Beats only launched earlier this year.

A recent Bloomberg article mentioned that bringing some of Beats' executives over to Apple could give the company more influence in the music business. Beats co-founder Jimmy Iovine is a seasoned music producer and executive, and was a friend of Steve Jobs. The theory is that the relationships and know-how Iovine could bring to Apple might boost the company's ability to reclaim some of its clout in the music space as users continue to move away from buying songs to streaming them.

One of the last ideas floating around is that Apple could use Beats' headphones popularity to make a big push into wearable technology. According to Quartz, Apple may want "to soup up a set of already trendy headphones with the technology to interact with users in novel ways" like playing music that match up with a user's mood.

So, in sum, Apple wants Beats for better online streaming or some sort of wearables play, and could gain some music industry insight at the same time. All plausible perhaps, but the skeptics are many.

One of Beats' iconic headphones. Source: Beats.

Drop it like it's hot
As Barron's reported, Toni Sacconaghi of Bernstein Research had this to say in an investor note: "On the Beats Music side, we also struggle with why Apple has to acquire this business versus competing with it directly with a subscription streaming option on iTunes Radio." He went on to say that Apple has many more advantages over Beats, including its nearly 800 million iTunes accounts and installed base of 500 million iOS devices. 

Oh, and Sacconaghi also mentioned this: "... there is a definite 'cool' factor driving Beats sales that may be ephemeral or may not continue with Apple as a large corporate owner, especially if Dr. Dre is not as involved,"

OK, so Apple's already had the user accounts and devices to have a successful music streaming service, and you can't bet on the Beats brand after it's absorbed into Apple, if that even happens.

Anything else?

Others have added that Beats lacks any intellectual property (that we know of), Apple doesn't like to have sub-brands under its own, save for Filemaker, and also the long list of tech companies that would be a better fit for Apple's long-term plans.

Foolish thoughts
To be sure, no one knows what Apple's doing right now or if it is in fact doing anything. We'll likely find out soon, but until then, I'm siding with the skeptics on this one. I understand how Beats could fit into Apple's music plans, but I don't see how spending the money, even if it's just a fraction of Apple's cash, is worth it. I think Apple could use its own talent and cash to build what it wants or hire anyone it needs to make a better music streaming service. The wearable tech theory seems the most unfounded to me as Beats doesn't have anything that Apple couldn't recreate with its own resources or already has.

The Beats acquisition isn't a completely terrible idea, but I don't think investors have much to get truly excited about if it does come to pass.

Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.