Seeking Street Cred, HTC Investing $300 Million in Beats Electronics
Taiwanese cellphone maker HTC is making a strategic tie-up with Beats Electronics, investing $300 million for a majority stake in the digital sound company and working to incorporate Beats technology into its product line.
“With the magic of mobile devices, it is easier than ever to discover and buy new music,” HTC CEO Peter Chou said in an interview with AllThingsD on Wednesday. “However, without great sound experience, it is a shame.”
HTC had said earlier on Wednesday it would have news on Thursday, but offered only the mildest of clues as to the announcement — noting only that it was coming out of Los Angeles.
The partnership is the latest move by HTC to strengthen its brand, particularly in the U.S. Although the company has seen fast-growing sales and gained ground against big-name cellphone makers, it remains less well known than rivals such as Samsung and Motorola. Chou said the Beats deal should “help create an emotional connection to HTC’s brand.”
Beats CEO (and legendary music producer) Jimmy Iovine told AllThingsD that the partnership with HTC is just the latest piece of his crusade to improve the sound in modern electronics. Iovine said that the shift from listening to music on stereos to one where MP3s are played on computers has led to “an entire generation lost to bad-sounding music.”
While the move to digital has seen TV move toward high-definition video, Iovine said audio quality has actually declined. “We went to digital and got worse,” he said. “That’s unacceptable. What has to happen is anyone who makes consumer electronics that transmits music has to be encouraged — to put it mildly — to have great audio.”
The first HTC product with Beats technology included is due out later this year, though Chou declined to offer any details. Beats has a separate deal with HP, which Iovine said remains intact. HP includes Beats technology in its PCs as well as the TouchPad tablet. The partnership is exclusive to HTC for cellphones, the companies said.
Beats has also honed its pitch to electronics makers — helping them avoid becoming just one of many sound-alike products.
“You can’t really exist as a consumer electronics company and not become a commodity, unless you understand popular culture,” he said. In addition to HP, Beats also has its Beats by Dr. Dre line of headphone products with Monster.