Do people really care how their gadgets sound?

HTC is making a $300 million bet that people want cell phones capable of producing high-quality audio. But will it pay off?

The Taiwan phone manufacturer said Thursday that it plans to acquire a majority stake in Beats Electronics, which designs headphones and other audio equipment endorsed by Dr. Dre, Lady Gaga and other musicians. Dre, more officially known as Andre "Dr. Dre" Young, co-founded Beats with record producer Jimmy Iovine.

HTC CEO Peter Chou intends to utilize Beats' technology to improve the audio fidelity on HTC devices, he told The Wall Street Journal. HTC's portfolio includes high-end Android smartphones such as the Droid Incredible.

"With the magic of mobile devices, it is easier than ever to discover and buy new music," Chou told the website AllThingsD. "However, without great sound experience, it is a shame."

HTC's stock closed Thursday on a high note, defying the weak performance of the Taiwan Stock Exchange and seemingly reflecting an endorsement of the Beats deal from shareholders.

"We need to continue to innovate and have products that differentiate and make more of an emotional connection with the consumer," Chou told The New York Times.

What's not clear, however, is whether consumers are actually clamoring for better speakers in their gadgets.

We see plenty of people on the streets listening to music with headphones -- increasingly those made by Beats -- but rarely do people crank tunes from their phones' speakers. (Unless it's that irritating Katy Perry ringtone that's always going off in Starbucks.)

That probably has less to do with phones' subpar audio performance and more with the impracticality of listening to music in that way. For now, a sound maker built into a small gadget cannot come close to the quality of solid headphones or a standalone speaker system.

Besides, many music consumers are already used to the less-than-stellar sound quality of digital songs, whose files are usually compressed to make them download or stream faster.

Two years before the HTC deal, Hewlett-Packard similarly surmised that outstanding audio quality in its hardware devices could position them to consumers as superior products worthy of a price premium. So it signed a deal with Beats.

The computer giant said it sold 1 million Beats laptops during the first 16 months of the partnership. HP typically sells as many computers in about 16 days.

HP also tapped Beats for its TouchPad tablet, touting the "amazing sound quality thanks to Beats Audio" and parading Iovine onstage for the product's unveiling. But HP cut the TouchPad's price by 20% on Thursday, less than two months after it hit stores, in a move that analysts say suggests poor sales for the touchscreen tablet.

The exclusive partnership between HTC and Beats only covers phones, AllThingsD reported. Beats CEO Iovine told AllThingsD that the deal with HP is unaffected. An HP spokesman declined to comment on the matter.

A record-industry initiative that would increase the sound quality on iTunes and other services, first reported by CNN in February, hasn't yet borne fruit. That could indicate that better-sounding music files is not a priority, according to some industry insiders, who are bullish on the convenience of streaming services as a selling factor.

Spotify, the popular music-streaming service, added high-quality tracks two years ago. A spokesman said then that the company would continue updating its catalog until the entire library was available in high fidelity. A blogger recently analyzed a sampling of Spotify songs and found that a substantial number were still not available in high quality.

The Walkman players of the '80s and '90s didn't have speakers. Last decade's iPods contained only a tiny speaker to produce the recognizable click noise when turning the wheel. Apple gave the iPhone a speaker because most phones need a speaker-phone option, and so the iPod Touch followed suit.

Copyright: CNN


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