Smartphone maker HTC said it will buy a 51 percent stake in Rap Moguls Dr. Dre’s Beats Electronics for $309 million.
It is the company’s fifth acquisition this year in its battle against Apple iTunes (AAPL) for market share in the online music space. Recently, HTC spent $300 million on S3 to acquire patents that can be used to fend off Apple.
“Smartphone prices have been falling. HTC will have to differentiate itself by adding value in content or services,” said Richard Ko, an analyst with KGI Securities. He expected more deals will be on the way for HTC.
Beats Electronics, which makes high-end headphones and speakers, was founded by Jimmy Iovine and Rap Mogul Dr Dre. It is estimated that the company has annual revenues of $340 million. Its competitors include SkullCandy (SKUL) and Plantronics (PLT).
Iovine, is chairman and founder of Beats Electronics, as well as chairman of Interscope Records, which produced albums such as Bruce Springsteen’s “Born to Run.”
ZDNet says that the deal is a case of “Apple envy”.
“This deal represents a $300 million case of Apple envy. Hasn’t the mobile audio battle been won already? Isn’t music a commodity? Dr. Dre brings a lot of credibility—as does music label luminaries such as Jimmy Iovine. The question of the day is whether this Beats gambit will work. Short answer: Hell no. Apple has already moved away from the music infatuation. Sure, iTunes dominates and is the largest music retailer, but let’s face it Apple’s future is the App Store. You could argue that video is more important to Apple on the mobile front.”
Channels: Apple, beats electronics, platronics, skullcandy