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HTC and Beats to take on Spotify, iTunes to boost phone sales?

HTC's $300-million investment in Beats Electronics has, so far, resulted in Beats earbuds being packed with Android smartphones. But the partnership may soon take a major step forward as HTC and Beats are reportedly looking to develop a music service that may end up challenging the likes of Apple's iTunes and Spotify.

According to a report from the news site GigaOm, HTC and Beats will roll out a new line of smartphones and tablets with Beats audio features and possibly even a music streaming service that could be unveiled as early as the Mobile World Congress event in Barcelona, Spain, later this month. 

Om Malik, GigaOm founder and reporter, wrote in the report that HTC is leaning on the connections of Beats co-founder and Chairman Jimmy Iovine's connections in the music industry to build a streaming service that "will be offered as a default music client on HTC phones and tablets."

Currently, the default music app on many phones running Google's Android operating system is Google Music and songs are sold through the Android Market. Rather than sell songs the way iTunes does on Apple's iPhone and as the Android Market does on Android phones, HTC may focus on a streaming service similar to the subscriber service Spotify.

HTC and Iovine, who started Beats with legendary hip-hop producer Andre "Dr. Dre" Young, are "still working on pricing plans and other details," Malik reported. Iovine has more than 40 years of experience in the music industry and is currently the chief executive of Interscope records.

Officials at Beats and HTC were unavailable for comment Wednesday morning. But, in the past, Iovine has told The Times that Beats isn't just a headphone company, or a boombox company -- though they make those things -- but rather a company that is looking to improve the quality of digital audio and the way people hear it however and wherever it can.

In August, when HTC purchased its majority stake in Beats, Iovine told The Times that, "The idea behind Beats has always been and still is to fix the degradation of sound in digital music. TV got better with HD and movies got better with high definition and digital has destroyed audio through the speed and convenience of compressing … it. Sound is the [weakest] end of the computer and that's what we've been working to change. HTC gives us a technology partner to work with to make this change happen."

Beats technology and branding has not only been used in HTC phones, but also Hewlett-Packard laptops and tablets, as well as special editions of the Chrysler 300 and Dodge Charger sedans.

At the Consumer Electronics Show in Las Vegas in January, Iovine wouldn't go into detail about what was next for Beats and HTC but did say to expect the partnership to reach a new level of integration this year.

HTC is certainly in need of some new products to lure in consumers. In the fourth quarter of 2011, HTC reported that its sales were down as the Taiwanese company faced growing sales and competition from rivals such as Samsung and Apple.

In the last three months of last year, HTC reported a revenue of about $3.48 billion, down 2.49% from a year earlier. HTC has also said that its first quarter of 2012 would like bring in less revenue, about $2.3 billion worth, which GigaOm noted could result in the company experiencing about a 36% drop from the fourth quarter of 2011.

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