Last night's news that mobile phone manufacturer HTC has taken a majority stake in Beats Electronics shows just how far the company has come since its original line of Beats By Dre headphones… and how far it's willing to go.
Beats co-founder and chairman Jimmy Iovine-better known as the chairman of Interscope/Geffen/A&M Records-sees the future of music consumption taking place on mobile phones. And he wants to make sure that this time, sound quality is not an afterthought.
"It's so important for the record industry that we make that transition to phones globally," he told Billboard.biz shortly after the deal was announced. "We need a global impression and a global service that is really high quality, and works."
After enjoying years of success with partner Dr. Dre in the Beats By Dre line of headphones (during which a pair of Beats headphones around Iovine's neck became as synonymous with his style as his trademark baseball cap), Beats in the last year has begun branching out to influence the devices those headphones plug into. First it was with HP on a Beats-branded line of laptop computers. Then it expanded into car audio via a deal with Chrysler. It even put out a docking station with speakers last year.
Beats' deal with Monster is largely a licensing and distribution agreement, as is the its deal with HP and Chrysler. But direct integration into a portable device is a whole new step in the company's progress, and that's why the HTC deal is such a big deal. Not only does it give Beats the capital to expand into the mobile music future-HTC is now the majority stakeholder in the company, investing $300 million as part of today's announced deal-but it also adds serious manufacturing and distribution power to the effort.
Iovine told Billboard.biz that Beats first began searching for a partner last November, and met with HTC and the CES conference in Las Vegas this January. According to market research firm IDC, HTC held 8.9% of the global smartphone market after the first quarter of this year, nearly doubling the 4.9% it held the same period last year. While that still puts it behind Apple, Nokia and Blackberry, HTC is seen as a surging competitor, particularly in the market for Android-based smartphone devices.
Both Beats and HTC said that Beats-branded devices will hit the market later this year, and Iovine did not rule out the possibility of offering artist-branded mobile phones in the same way that the Beats headphone line has partnered with such artists as Lady Gaga, Diddy and Justin Bieber.
From the way Iovine talks about the mobile phone market as it relates to music, there doesn't seem to be anything he won't try.
"We've got to make this transition into phones properly," he says. "I cannot overstate this. We cannot miss this opportunity. We cannot get this wrong like we have in the past."