Business, Entertainment, Hardware

HTC to Offload Share in Beats, Beats gets $500M from Carlyle Group

There have been many rumors that Beats Audio wanted out of their relationship with HTC. Those rumors started about a month ago, and haven’t let up. That is until today when it became official that HTC will be offloading their share of Beats Audio, which was at one point up to 50.1% of the company. Last year, they offloaded half of that share for $150 million, and are now going to offload the remainder for $264 million which represents a net profit for the company that has integrated Beats Audio into many of their own products.

While this partnership is a sad one to see HTC let go of, they did a pretty poor job of using Beats’ own branding and marketing to improve their brand’s standing and simply listed it as another feature. HTC should have been more aggressive in co-branding their devices with Beats, especially the HTC One which is probably the best sounding phone I have ever used, as per my own review. Nevertheless, with this move HTC officially ends their investment in Beats and will likely end the Beats Audio marketing in their products as well. While HTC hasn’t really talked about the importance of Beats, I found it to be more of a software improvement than a hardware one since they didn’t talk about it or promote it much.

Now that HTC has freed up so much share of Beats Audio, Jimmy Iovine and Andre Young (Dr. Dre) have decided that they will go private and take $500 million from the private equity firm Carlyle Group for the same share as what HTC used to own. This means that Beats Audio is now valued as a $1 billion company and that their bass-heavy headphones and other audio products are seen as a valued asset with the prevalence of music that accentuates bass. While I personally would never own a pair of Beats by Dre headphones, I can understand why Beats by Dre has had so much success. Especially when you consider that they’ve turned Beats by Dre into a fashion statement and a status symbol and not just a pair of headphones. This is something that HTC should have latched onto and failed to do so.

It remains to be seen what Carlyle group has planned for Beats Audio, but I have a feeling they just want to see a similar amount of profit growth that HTC did with their investment. HTC saw an over 30% return on investment and I’m quite sure that Carlyle Group would not balk at such a return on any investment.