Why would a cell phone manufacturing company want to own the majority share of a music electronics company? Sure, having a partial share would be a great way to give your handsets an advantage because it means that you can use the technology owned by the company that you're now partnering with. That sort of deal makes sense. But HTC now owns over half of Beats Electronics, a majority share, which gives them the authority to make executive decisions or overrule decisions made by Beats. Why would HTC want that kind of power over a music electronics company? What exactly do they plan on doing with it? Is this $300 million deal about more than just a new sound chip in HTC's future phones?
I honestly don't have the answers to those questions. What I do know is that this deal was genius on the part of HTC. Why? Imagine this scenario:
"Hi, welcome to [insert carrier here that does not yet sell the iPhone]."
"Yeah, can I buy an iPhone?"
"No, I'm sorry we're not yet selling the iPhone at this time, but we do have this other cool Android phone."
"No thanks, I'll just switch to [insert carrier here that does sell the iPhone]."
Yes, believe it or not, Android loyalists, people do still want the iPhone. There are still people out there who wouldn't consider buying anything else besides the iPhone. You can call them whatever you want. I call them 'the average consumer'. The average consumer doesn't know about dual-core processors, Super AMOLED Plus displays, or *gasp* rooting. When you get right down to it, most people probably don't even know the first thing about 4G. In fact, 34% of iPhone owners and 24% of BlackBerry owners think they already have a 4G device. Do you see my point? All the stuff that you and I care about - dual-core processors, 4G, high-res displays, rooting, modding, etc. - the average consumer does not know or care about. The average consumer bases his or her opinions on brand names. I don't know the technical differences between an Insignia television and a Sony television, but I'm more likely to buy a Sony TV over an Insignia TV.
So here's the predicament for smartphone manufacturers other than Apple: How do we get the average consumer to buy our phone instead of the iPhone when they don't care about our dual-core processor, our 4G speeds, or our 3D display? HTC's answer: Beats. Sure, they're not the highest rated headphones in their price range according to just about every source out there, but we already established the fact that the average consumer only cares about brands, and Beats by Dr. Dre is a pretty cool brand. Suddenly that phone that isn't an iPhone doesn't look so bad. Maybe more people would be willing to buy that cool smartphone with Beats technology instead of an iPhone.
Will this actually work? Only time will tell. However, we haven't seen HTC make too many mistakes when it comes to marketing, and in terms of marketing, this is the jackpot.