It was back in 2011 that Taiwanese phone maker HTC bought a very significant 50 percent stake in heaphones manufacturer Beats Audio. It was a significant investment for HTC with the company spending a good $300 million for the same. The result was a bunch of handsets with the Beats Audio branding as well a lot of questions as to whether the presence of Beats Audio actually enhanced the sound quality on HTC smartphones.
A little over a year later, Beats Audio bought back 25% stake that HTC owned by paying $150 million. Now just a few months after that happened, we now have news coming in about Beats supposedly contemplating buying back the remaining 25% stake in the company. This time though, it is unclear as to how much money the company would pay to get the share back.
The speculation is based on a Wall Street Journal report that says that Beats is looking to bring in a new investor to provide new avenues for funding and future growth. This obviously points towards the fact that the company did not consider HTC’s collaboration with it much fruitful in terms of brand reach or revenues. While Beats Audio had managed to shake up the segment in which it was operating – raking up over 59 percent marketshare in the high end headphones market in the U.S, HTC has had a very rough patch with it continuously losing market share in spite of having a bunch of decent Android powered offerings. Beats Audio also managed to increase its revenue fivefold since 2010.
Currently with almost all high end handsets bundled with Beats Audio, it would be interesting to see if both the firms continue some form of agreement to keep the co-branding alive for future handsets as well – even if they severe financial ties.