HTC+Beats $300M deal: It’s about differentiation

HTC is acquiring Beats Electronics LLC, the company behind the Beats audio , visually known as “the red cord”, for $300M. From what HTC’s Peter Chou has said, HTC will effectively be the only smartphone company to integrate its audio technology. Obviously, Beats has been doing quite well for itself, and has great audio qualities that we have experienced before on PCs and laptops. That said, many would argue that “audio” is not really something that customers seek when shopping for a smartphone and tablet. But is that true?It depends how you look at it. In my opinion, customers may probably not want to pay a premium to get Beats audio, but it is likely that HTC will integrate Beats at no visible cost to the end-user. From that perspective, having Beats does bring incremental differentiation to an already very popular smartphone line-up.

This is further proof that handset makers will take any edge that they can get, and after hitting record revenues (again) last quarter, HTC can afford it. While this may not sound like a “critical” technology addition to many smartphone observers, I think that Beats will help HTC communicate its differentiation to the public.

However, Beats is not a “secret weapon” and won’t deal a fatal blow to competitors, but again, in a very crowded Android landscape, anything helps, and Beats is arguably a great brand to have.