HTC acquires high-end mobile audio technology in Beats.

AUG. 11, 2011 • The Taiwan-based smartphone maker HTC Corp is buying a 51% controlling share in U.S. specialty headphone designer Beats Electronics for $309 million. Beats markets enhanced headphones that reproduce a fuller spectrum of audio, and was launched by music producer Jimmy Iovine, and rap artist Dr. Dre. The move is seen as a way to enhance HTC’s products against competition from Apple and Samsung.

Impact: HTC likely has more name recognition in Europe for quality smartphones than it has in the U.S. A good way to build awareness is to carve out a unique niche that creates word of mouth. The expectation is that quality headphones are going to become a more important feature option for mobile devices. Locking up Beats could give HTC an early edge in this area that could get them added mindshare in the U.S. during the next 36 months.