Beats Electronics co-founders Dr. Dre and Jimmy Iovine, along with President Luke Wood want to end their partnership with HTC. The Taiwanese smartphone developer initially purchased 51 percent of Beats Electronics, for a whopping $309 million in 2011. On Monday, the Wall Street Journal reports that Beats Electronics is the producer of the globally popular Beats by Dre headphones.
Beats Electronics is based in Santa Monica, California. Next to its partnership with HTC, they also have partnerships with HP and the Chrysler Group.
In 2011, HTC hit the ground running with Beats by Dre, by placing their logo and audio technology on its smartphones. The Inquirer reports that HTC even gave out free Beats headsets with their handsets, as a special promotion. The marketing definitely helped promote Beats. The companies parting ways could have a negative effect on both parties. Beats won't be able to cross market its products and HTC won't be able to say that its smartphones have the best sound technology.
HTC acquired a 51% stake in Beats for $309 million back in 2011, but it sold half of it back to Beats in 2012. Now, Beats wants to buy HTC out completely and bring in a new investor who could pave the way for the company's further growth. Beats wants to create speakers and plans on launching a service that will allow them to stream music.
The WSJ also reports that HTC and Beats were becoming irritated with each other because they didn't have the same strategy. Because of these differences, HTC had approached Beats earlier this year and asked if they wanted to purchase the remaining stake that they had.