HTC is taking one more strategic investment in digital content, this time in music. The company today is expected to announce that it is making a $309 million investment in Beats Electronics, a digital audio technology company, which it will incorporate into future products to court music-loving mobile consumers, and attempt to wrest some of Apple’s dominance in portable, digital music. The move follows from other investments it has made earlier this year, in UK video company Saffron Digital and cloud-gaming startup OnLive.
Beats Electronics provides a technology that it claims improves the quality of digital audio, something that its CEO, the music producer Jimmy Iovine, says has deteriorated since people have switched to MP3s from stereos: “an entire generation lost to bad-sounding music,” is how he described it to AllThingsD, which reported on the news late yesterday.
HTC is expected to formally announce this partnership Thursday and will be holding a press call around the news.
We have seen other examples of smartphone and tablet makers make moves on tech companies — in the form of strategic investments and content deals — as part of their strategy to enhance their entertainment/digital content plays.
Several have been more about investing in enabling technologies rather than for content itself. They have included HTC’s $48.5 million buy of Saffron Digital and $40 million investment in OnLive. Saffron Digital’s main business is around video content delivery services for mobile devices, while OnLive is focused on cloud-based gaming.
Motorola has also taken an undisclosed stake in Catch Media, which specializes in cloud-based storage and media playing services. Among its customers, Catch powers the Music Anywhere offerings from Best Busy in the U.S. and UK.
The idea behind these investments? That video, music and other premium content offerings bundled with a device helps it stand out from the rest of the me-too tablet/smartphone pack. That’s especially important for those working with Android, who are all using the same platform and more or less the same high-end technical specs. But perhaps the biggest competitive threat is Apple (NSDQ: AAPL), which has positioned itself right in the center of mobile content with groundbreaking App Store, iTunes music and soon-to-launch iCloud service. Figures from the end of last year from NPD put Apple’s share of the digital music market at some 66 percent, which has been bolstered by its dominance in portable music players like the iPod and iPhone.
Staking out its own position in the music market is HTC’s aim with this deal. AllThingsD notes that the deal is exclusive to HTC for smartphones but not for tablets. Beats already has a partnership with one of HTC’s rivals there, HP (NYSE: HPQ), which announced a Beats partnership earlier this year, integrating the technology into its TouchPad tablet as well as PCs. Other products include “Beats By Dr Dre” headphones made by Monster (one celeb-fan, Eminem, pictured).
The first HTC product to feature Beats will come out later this year.