HTC Sells Controlling Beats Audio Stake As Smartphones Stumble

HTC has scaled back its role in Beats Audio, with the headphones manufacturer buying back half of HTC's shares in the company as the smartphone firm struggles to find its feet once more. Described as "a realignment of their business agreement" the deal will see Beats buy 25-percent of HTC's 50/50 holding, ending up with 75-percent ownership; however, the two companies insist that they still intend to work together.

"Over the last year, HTC and Beats have made great progress in sound innovation, product integration and brand awareness with successes like the HTC One" the companies said in a statement this weekend. "HTC and Beats will continue to work closely, including a joint global marketing campaign later this year."

As a result of the agreement, Beats Audio will have "more flexibility for global expansion" though HTC will continue to have a "major stake and commercial exclusivity in mobile." That means no Samsung, LG or Motorola phones with Beats Audio tech inside.

Several HTC devices in recent months have included Beats technology, which usually comprises special tuning and/or EQ profiles along with bundled headphones that exceed the quality we've grown to expect from the usual in-box fare. However, HTC has yet to capitalize on the potential of Beats integration with a solid content sales strategy; as we've observed before, the company lacks a solid music store in the same manner as Apple's on-device iTunes story.

Selling off some of the Beats stake will return some much-needed cash to HTC's wallet; the deal to invest in 50-percent of the headphones company cost the smartphone firm $300m roughly a year ago. In the intervening months, however, HTC has seen sales struggle, though it has insisted that it remains committed to the Beats partnership.