HTC invests in Beats for better smartphone audio

HTC has invested in Beats Electronics, a U.S. headphones company rap artist Dr. Dre helped found, as part of a move to improve the audio on the Taiwanese smartphone maker's devices.

The partnership, announced on Thursday, will lead to a line of HTC devices integrated with Beats "sound innovations," according to a statement from the company. The devices will be available this fall.

HTC will have exclusive rights among mobile phone companies to Beats' products, said Jimmy Iovine, chairman of Interscope Geffen-A&M Records and co-founder of Beats, during a conference call to announce the deal.

Beats Electronics is a developer of high-end headphones, which claim to reproduce the sounds heard in professional recording studios. The company also helped build an audio system for Hewlett-Packard's ENVY laptop series.

HTC is investing $300 million for a majority stake in Beats, it said.

It said that after its investment, Beats will continue to operate autonomously, and maintain its partnerships with HP, Chrysler Group and Monster Cable Products.

The executives from HTC and Beats weren't specific about what they will sell. HTC CEO Peter Chou hinted that Beats has technology beyond headphone hardware that will make it into HTC phones. Through the partnership the companies will "work very closely together to make deep integration of Beats technology, software and hardware and the authentic user experience of HTC mobile phones," Chou said.

HTC may also benefit from Beats' experience as a consumer brand. "This partnership will also give HTC the opportunity to learn how the music industry, the Hollywood industry, do marketing," he said.

In explaining that Beats approached HTC about making the investment, Iovine compared Chou to Apple's iconic CEO Steve Jobs. "Why Apple works so well is they do have a head. If Jobs gets an idea, the rest of the company follows. When I went looking for a partner, I found that in Peter," Iovine said.

The investment in Beats will help HTC differentiate its Android devices against rivals including Motorola, Samsung and Sony Ericsson, said Daryl Chiam, an analyst with research firm Canalys. The newest Android smartphones are already starting to feature very similar hardware offerings, such as dual core processors, 3D screens, and the ability to connect to faster fourth-generation LTE (Long Term Evolution) networks, creating a need to differentiate, he said.

"It doesn't surprise me HTC would do this, considering the competition, especially among Android based vendors," Chiam said. "I think they will be able to use this as differentiator not just for music phones, but for mass market models."

HTC acquired Dashwire in Seattle earlier this month to boost its mobile backup and sync services.

Copyright © 2011 IDG Communications, Inc.

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