Saturday, August 13, 2011

HTC teams up with Beats by Dr. Dre, what does it all mean?

Thursday morning, HTC officially announced a deal with Beats by Dr. Dre where HTC acquires 51% of the company for a cool $309 million. The future result of the partnership of both companies is still under wraps but here are a few scenarios that are distinct possibilities.

Many predict this first scenario is what's going to happen (and is somewhat implied in the press release); HTC will follow a similar route to the HP TouchPad and feature "Beats" technology built into their devices while still bundling their regular non-branded OEM headsets. While this is the most popular theory, I don't believe an acquisition was needed to get the "Beats branding" as a licencing agreement could have allowed HTC to slap the Beats logo onto HTC boxes and allow for their phones to be marketed "with Beats" or "powered by Beats" and that would be the end of the story.

Another scenario, that I believe is more likely, is that HTC will bundle future smartphones with Tour ear buds. The reason I believe this is the more likely to happen is that $309 million and 51% of a company is a steep price and quite some responsibility. That being said, this would also be the most effective use of the substantial chuck of change HTC forked over for majority ownership of Beats. From the wise words of Chris Ziegler at ThisIsMyNext/Verge, this would be the only option that would "put the butts in the seats". I can't help but agree, if there was anything that could get the name HTC on the lips of even more people it would be by creating the buzz that a company like Beats currently has with it's line of audio products.

One dark horse scenario that has been thrown around in some tech circles and could potentially happen in conjunction with the second scenario, is that HTC could create their own personal music player (PMP) to compete with Apple's iconic iPod Touch. They are already fierce competitors in the smartphone market and with the acquisitions of Beats, HTC could bring the fight to Apple's "other" cash cow in a PMP market that is really lacking competition. One could argue that if HTC could offer an iPod Touch competitor at different price points (one budget, one slightly under and one at par with the iPod Touch) and all bundled with Beats headphones it could become a compelling alternative. HTC already has nailed down the UI visual appeal in Sense 3.0, Android has identical if not similar offerings in terms of Apps and the marketing muscle and public mind share of Beats by Dr. Dre would be their Ace in the hole.

At first the HTC/Beats marriage was a bit of a head scratcher but after dedicating a bit of thought to it, this really could be HTC's big differentiator in a market that is getting fiercer by the day.

Here's the official announcement:

Strategic HTC investment to result in Beats integrated HTC phones this Fall 
Taoyuan, Taiwan & Santa Monica, CA – August 11, 2011 – HTC Corporation, a global
designer of mobile devices, today announced a strategic partnership and investment
with Beats™ Electronics LLC, the company redefining the audio market with its iconic
Beats by Dr. Dre™ audio experience. The two fast-growing brands will focus on bringing
high performance sound to HTC phones. 
“The HTC and Beats by Dr. Dre partnership is an opportunity for two world-class
companies to redefine the smart phone industry and define the future,”
said Jimmy Iovine, Chairman of Beats by Dr. Dre and Chairman and CEO of Interscope
Geffen A&M Records which is a division of Universal Music Group and a stakeholder in
Beats. “For Beats by Dr. Dre, this represents a critical step in our continued mission to
clean up the destruction of audio caused by the digital revolution; and reengineer how
sound is delivered so that the consumer feels the music the way that the artist intended.”
HTC® and Beats™ have been working together to create superior mobile audio
experiences for consumers, which will result in a line of HTC devices integrated with
Beats sound innovations, available this fall. 
“Beats has found a unique way to harness popular culture in a manner that is unlike any
other brand today,” said Peter Chou, CEO of HTC Corporation. “It’s an exciting brand
that has been built around providing something very special, and we believe our
strategic partnership will provide customers with unbeatable sound on HTC phones. We
obsess over every detail of a consumer’s mobile experience and audio is a critical part of
that experience.” 
HTC is known for unifying content, services and devices into unique mobile experiences.
And Beats is known for its unique consumer brand appeal and ability to reproduce the
full spectrum of sound captured in professional recording studios, allowing consumers to
hear music the way the artist intended. Bringing these two great brands together will
create superior mobile music and sound experiences, while accelerating HTC’s entry
into the youth and accessories markets globally. 
Beats Electronics will continue to operate autonomously with Iovine as Chairman and
Luke Wood as President & COO with its current business partnerships that include
Monster Cable Products Inc., Hewlett-Packard and Chrysler Group LLC. Iovine will also
continue serving as Chairman of Interscope Geffen A&M Records.“Our customers have clearly responded to Beats and HTC, and Best Buy is proud to feature their products in our stores,” said Brian J. Dunn, CEO, Best Buy. “We are committed to offering innovative and entertaining technologies that help consumers enhance their lives. Our customers expect that from us. The unique HTC Sense experience and the great sound of Beats provide prime examples of that focus.”  
About Beats Electronics LLC
Established in 2006, Beats Electronics is the brainchild of legendary artist and producer
Dr. Dre and Chairman of Interscope Geffen A&M Records Jimmy Iovine, who set out to
develop a new type of headphone with the capability to reproduce the full spectrum of
sound that musical artists and producers hear in professional recording studios. For
more information, please visit 
About HTC
HTC Corporation (HTC) is one of the fastest growing companies in the mobile phone
industry. By putting people at the center of everything it does, HTC creates innovative
devices that better serve the lives and needs of individuals. The company is listed on the
Taiwan Stock Exchange under ticker 2498. For more information about HTC, please visit

No comments:

Post a Comment