• by Laurie Sullivan  @lauriesullivan, May 9, 2014

Apple is reportedly on the verge of acquiring Beats Electronics for $3.2 billion, making it the company's biggest acquisition. The deal could also expand services like iRadio into Chrysler, Fiat and Dodge through an existing partnership between the audio company and the automakers.

BeatsAudio's partnership with the automakers could land iRadio in the dashboard of cars, making it easier for Apple to build out its platform across the auto industry to compete with Pandora, iHeartRadio, MyLink and SiriusXM Radio, among others. The dashboard option would provide easy search functions and advertisements, audio and visual. It would help Apple reach deeper into the mobile music space that eMarketer pegs at $1.68 billion in 2013, and estimates will reach $2.52 billion this year.

Acquiring Beats would support Apple's hardware sales through a deal the audio company has with Hewlett-Packard in computers and tablets. Apple's retail store sales reached $20.22 billion in 2013 -- up 7.4% compared with 2012, per eMarketer. The company's ecommerce sales rose 23.5% to $9.29 billion in 2013 compared with the prior year.

At its core, this deal would be about the marriage between software or content and hardware, per eMarketer Analyst Paul Verna. "Perhaps more than any other company, Apple has understood and profited from the powerful possibilities of a software-hardware ecosystem," he said. "This deal would be an extension of that philosophy."

Verna's doesn't view the automaker partnerships as the main motivator. "Beats' core business is headphones, and I think Apple would initially try to leverage Beats’ success in that area," he said. "In the longer-term future, I see potential for automobile integration, including an in-dash player. Other hardware products could result from this alliance, such as wearable technology and smart-home devices."

Along with the hardware and sound comes additional iAd revenue that eMarketer estimates at 2.7% of mobile advertising market in 2013, which should rise to 2.8% this year. By comparison, Pandora's net U.S. ad revenues accounted for 3.8% of the U.S. mobile ad market in 2013, down from 5.5% in 2012. eMarketer estimates that Pandora's share of mobile advertising in the U.S. will decline to 3.0% this year.

Making iRadio a subscription service would also augment revenue. In the U.S., brands spent $1.65 billion for ads running online and on mobile radio services. eMarketer estimates the market will increase 23.2% in 2014, reaching $2.04 billion. The analyst firm estimates broadcast radio ad spend fell 1.2% in 2013, and will only grow another 1.7% in 2014, totaling $15.47 billion this year.