How HTC didn’t meet “financial commitments” to Beats Audio

July 24, 2012
5 28 3 0

    I think HTC made quite a few financial mistakes last year, and the outcomes of those mistakes are starting to appear this year. Besides other strategic mistakes that led to the sharp decrease of their market share and profits in US and Europe, like releasing too many “no-name” models with no long-term branding, they also made some very bad investments last year.

    That includes the $40 million they paid to OnLive, and I still haven’t seen anything coming out of that yet. They probably thought that their tablets will take off and their customers will want to play those games on their tablets. But nobody wanted HTC’s tablets because they were far too expensive, so the OnLive investment was all for naught.

    Then we have the epic $300 million which HTC paid for S3 Graphics and their patents, and the patents proved to be worthless against Apple, and I have no idea what they are going to do with a company of GPU makers now. I haven’t heard anything about them making their own GPU, the way Nvidia does with the Tegra line-up. So that’s another wasted investment as well.

    But the most “public” mistake, seems to have been the one in the Beats Audio company – another cool $300 million, which seems to have taken them nowhere. The very first reviews of Beats Audio said that it’s mostly a gimmick. So how could HTC even pay this much for something that’s seen as a gimmick from the inception? Didn’t HTC try the headsets and the audio profile first before they decided to invest $300 million into the company?

    Just a few months after they saw the Beats Audio headsets weren’t a selling point for their phones, and it was making their phones too expensive, they decided to sell the headsets separately. This made the investment even more pointless. So now HTC has sold back half of their shares into Beats Audio, and we’re finding out that they didn’t meet their “financial commitments”. I can’t say I’m surprised. The whole Beats Audio strategy crumbled horrendously.

    All these investments seem like they were made when HTC was at the top of their game, when they thought they had too much money and they decided to start doing impulse investments. Now the reality of these choices are sinking in, because their quarterly profits are not doing so well, even after introducing the One series smartphones. Hopefully, the bad times HTC are experiencing will push them to return to the innovative spirit. The creative decisions that made HTC popular in the past and a leader in the market are the timely choices that pushed technology forward as a whole.

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