HTC buys $300M stake in Dr. Dre's Beats to upgrade mobile audio

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HTC confirmed it will purchase a 51 percent majority stake for $300 million in Beats Electronics, the headphone manufacturer founded by hip-hop icon Dr. Dre and Interscope Geffen A&M Records chairman Jimmy Iovine. Beats Electronics will continue to operate autonomously with Iovine as chairman and Luke Wood as president and COO.

HTC said it will integrate Beats technology into its devices to deliver improved mobile audio experiences for music, movies and videogames, promising to roll out the first Beats-enhanced products sometime in the fourth quarter.

In a conference call with reporters, HTC CEO Peter Chou said the deal is an opportunity for HTC to innovate. "I think this partnership is really built on the core belief that amazing audio is a key to the mobile experience," he said. "HTC is always looking for opportunities to differentiate and create emotional experiences with consumers. We think that this a very good opportunity for HTC to continue to differentiate in the market."

Chou said HTC's investment in Beats is analogous to the ones it made earlier this year into content delivery platform provider Saffron Digital and cloud gaming firm OnLive.

Iovine said that more mobile companies will be upgrading the audio experiences on their smartphones within the next three months, and that HTC will lead that charge. A recording industry veteran, Iovine declared on the call that the recording industry needs to migrate to phones and the quality needs to be superior. "This marriage will expedite that," he said. Iovine said the company's relationship with Hewlett-Packard for its webOS devices will continue, but that the relationship with HTC is an exclusive partnership.

Interestingly, Best Buy said that in response to the deal, consumers who buy an HTC smartphone at a Best Buy or Best Buy Mobile store this weekend will get 20 percent off of any set of Beats by Dr. Dre headphones.

The Beats deal represents HTC's second significant acquisition this month. Last week, the device maker scooped up mobile applications and Web services firm Dashwire for a reported $18.5 million. Dashwire's Dashworks platform allows consumers to set up and personalize their smartphones to enable access to data, documents and photos across multiple screens and services. HTC said it will leverage Dashwire's cloud sync and device setup solutions to extend its HTCSense.com cloud services portfolio--the acquisition also will support the rollout of mobile instant messaging services across its Android devices.

For more:
- read this release
- see this WSJ article (sub. req.)
- see this Dow Jones Newswires article (sub. req.)
- see this TechnoBuffalo post

Related articles:
HTC acquires Dashwire to boost cloud computing aspirations
HTC scoops up S3 Graphics to enhance mobile game visuals
HTC boosts content efforts via Saffron Digital investment
HTC embeds SoundHound music app on Android smartphones

Article updated Aug. 11 with additional information. Phil Goldstein contributed to this report.

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