The partnership between HTC and the Beats By Dr. Dre company has been one of the more visible aspects of the former's branding over the last three years. Ever since HTC bought 50.1% of the company for an estimated $300 million in 2011, the headphone maker's iconic logo has had a reserved spot on both devices and software. But according to a report from the Wall Street Journal, Beats is looking to end the relationship in order to find a new partner for greater expansion.
That wouldn't be all that difficult for Beats. They bough 25% of the company back from HTC in 2012 for $150 million, making HTC a shareholder instead of a majority owner. Ever since then, a never-ending line of de-facto celebrity endorsements and new products has kept Beats at the height of consumer consciousness, growing revenue from $200 million in 2010 to an eye-popping $1 billion in 2012, with 59% of the US premium headphone market to its name. By contrast, HTC has been largely stagnant, losing market share to Samsung (just like everyone else) and failing to keep its ground despite the impressive One family of devices and its Beats and BoomSound branding. HTC's plan to bundle Beats headphones with new phones died out quickly.
Beats would probably need to pay back considerably more than $150 million to gain that last quarter-share, but it wouldn't be that much of a stretch, and HTC could use the cash. The WSJ reports that Beats wants the freedom to pursue new markets in home theater and car stereos, plus an online music streaming service. (Beats has so far failed to leverage MOG, a streaming service that it bought for $12 million last year.) But once they're free of HTC, you can bet that Beats will look for greener pastures when it comes to mobile devices. Beats already partners with HP for joint branding on Windows laptops and some tablets, a deal which pre-dates the 2010 buyout.
Representatives from Beats and HTC have declined to comment. All this information should be considered rumor at the moment, but the Wall Street Journal is rarely wrong in these matters. A deal makes sense for both parties.
Source: The Wall Street Journal