Earphones manufacturer Monster Cable Productsand Beats Electronics, a company co-owned by rap star Dr. Dre will be severing ties after five years in business. In a story carried by Bloomberg Business Week, the two have decided to call it quits after their five-year contract expires at the end of the year. Beats and Monster are best known for Beats By Dr. Dre line of high-end earphones that revolutionized the headphones industry by introducing a designer element to the sound deliver system.
What started as a singular venture between Dr. Dre and Beats co-founder Iovine has exploded over the past five years into a $1 billion dollar industry with Beats alone accounting for a staggering 53% of this industry.
This is notwithstanding the fact that other celebrities have launched their own line of luxury earphones including the likes of Snoop Dog, Ludacris and most recently 50 Cent. Beats has in the past however teamed up with other stars such as Lady Gaga, Justin Timberlake and P Diddyto launch other celebrity Beats lines.
The split between Beatsand Monster comes at a time when there is a flurry of activity in the consumer electronics sector, as occasioned by what was seen at the just concluded Consumer Electronics Show in Las Vegas. More and more entrants to the luxury electronics sector bodes ill for established players owing to the ramping up of competition that comes with these new entrants and razor-sharp technology.
Beats however has a plan, according to Iorvine. Planning to go solo is something that has always been in the plan and he adds that the deal with Monster was a purely manufacturing deal and was in no way a partnership. This means Beats retains all ownership of the Beats By Dre brand as well as all associated technologies, something that will most likely leave Monster grappling with its future.
Iorvine goes on to add that Beats already has deals with HTC, HP and Chrysler to include Beats speakers in their products so it’s clear that the breakup wont hurt Beat’s business. When asked whether there was any bad blood between Beats and Monster, Iorvine is quoted as saying:
“It was always planned. It was always a five-year deal,” the chairman of Interscope/Geffen/AM Records said on his way back from the Consumer Electronics Show in Las Vegas. “It was a manufacturing distribution deal. We were with Monster for headphones and speakers. It was always a plan to turn into a freestanding company.”
The two companies however plan to release some products in the meantime including the Mixr and Executive headphones as well as a new version of BeatBox all of which will be launched from February 2012.
