With the Rezound, will HTC's $300 million Beats Audio gamble pay off?

HTC has invested over $300 million in its Beats Audio efforts. But will the project ever bear fruit?
Written by Ricardo Bilton, Contributor

When HTC announced that was buying a majority stake in Beats Electronics for $300 million back in August, most were, understandably, confused. It seemed a dubious partnership, fueled not by any real vision, but rather by HTC's desire to become an Apple-esque technology/lifestyle brand. And what better way to accomplish that than via Beats Audio, which had become successful for improving the relationships people had with music, their most personal of lifestyle choices?

But from a marketing perspective, the move made a whole lot of sense. Beats Audio has never been about just headphones and technology. The Beats Audio brand is infused with a certain amount of coolness and price-induced exclusivity. It's hip, it's music-focused, and though Dr. Dre himself isn't very young anymore, the prime consumers of Beats Audio devices are young people with (hopefully) a lot of cash to burn.

Likewise, Beats Audio headphones are very distinctive, and emerged in full force at a time where nearly everyone had white earbuds plugged into their ears. So it was, from the beginning, a fashion statement, a literal and metaphorical self-statement that "I am different. I appreciate music on a higher level."

That last bit resonates strongly with Jimmy Iovine, the music executive, producer, and founder of Beats Audio. Iovine laid out a bit of the Beats Audio philosophy during the unveiling of the HTC Rezound on Thursday. The Beats Audio project, Iovine said, emerged out of frustration with "the destruction and degradation of sound caused by the digital revolution."

Indeed, the digital revolution did more than just degrade the sound quality of music: It unseated a whole

industry, placing free music on countless hard drives and catching music executives with their pants at their ankles. They had no idea what was going on. And they needed technology companies to help them out, which companies like Apple did in a big, big way.

Enter Jimmy Iovine. Iovine realized that the best way to improve the music industry's stakes was to reverse that relationship: Technology companies had to need the music industry.

That's the the rationale behind Beats Audio, which Iovine says brings the music industry into the technology world. That relationship has gone a lot further with deals with companies like HP and HTC, which have more closely combined the worlds of technology, music, and mobile.

And that's a good thing for music. While some music producers have argued that the audio profiles of Beats Audio headphones are far from accurate, the devices certainly do a better job than the run-of-the-mill earbuds phones and MP3 players tend to be packaged with.

And for that Iovine and HTC deserve some credit: Alerting consumers to the sad reality of their personal sound technology makes them more likely to improve it. That, in the end, can only result in people enjoying their listening experience more and subsequently investing more money in it. And that, undoubtedly, will be music to record executives' ears.

That's good news for HTC as well. In HTC, mobile and music have found an interesting marriage. As devices like the Rhyme have shown, becoming a lifestyle brand is clearly the company's goal. While attaching itself to the Beats brand is a risky investment, its very likely that the momentum will be in HTC's favor, especially if the Rezound does as well in North America as the Sensation XE and XL have done abroad.

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