August 11, 2011 10:27 pm

HTC to take control of Beats headphones

HTC, the Taiwan-based smartphone manufacturer, is paying $309m for a 51 per cent stake in Beats Electronics, a US-based maker of high-end headphones best known for its partnership with Dr Dre, the rapper and music producer.

The deal, HTC’s fifth acquisition this year, will enable the company to integrate Beats’ sound technology into its smartphones. Like other smartphone makers that use Google’s Android operating system, HTC is trying to differentiate its handsets from competitors, including Samsung and Motorola Mobility.

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HTC said it plans to have a number of products that incorporate Beats technology on the market by the end of the year.

The deal was announced in Los Angeles by Peter Chou, HTC chief executive, and Jimmy Iovine, Beats chairman, who said they expect the transaction to close in coming months. Mr Iovine, will continue to run the company.

“This partnership is based on a core belief that amazing audio is the key to mobile phone experience,” Mr Chou said. “We think this is a very good opportunity to continue to differentiate our products.”

The HTC chief executive added that Beats ”cool” brand image and appeal would also help HTC continue to boost its brand in the US and other markets. “Sound quality is very important. People are willing to pay more for better quality.

“Smartphones are becoming the centre of mobility,” Mr Iovine said. “Our goal is to deliver high-quality music to smartphone owners. The music industry has to make music available in the places people want to listen to it.”

The latest figures published today by Gartner, the technology market research company, revealed that global smartphone sales increased to 107.7m units in the second quarter, up 74 per cent over the year, with Android-based smartphones claiming a 43.4 per cent market share, up from 17.2 per cent a year earlier.

Android-based smartphones now dominate sales of new smartphones ahead of those running Nokia’s Symbian operating system and Apple’s iOS, but it has become increasingly difficult for the manufacturers of Android-based smartphones to distinguish their handsets from each other.

Beats Electronics, which also makes speakers, was founded by Mr Iovine and Dr Dre in 2008 and has quickly established a reputation for designing high-end headphones, earbuds and speaker systems aimed at the youth market. The company claims to be the top supplier of headphones priced over $100 in the US and France.

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