Exclusive: HTC rumored to be working on a streaming music service

HTC CEO Peter Chow and Jimmy Iovine

HTC Corp., one of the earliest champions of Android-based smartphones seems to have fallen on hard times, thanks to growing power of Samsung and Apple(s AAPL). But the Taiwanese phone maker isn’t ready to call it quits and is said to be working on a slew of new products including a new tablet, new phones and possibly a music streaming service, according to sources familiar with the company’s plans.

My sources say that HTC, which last year acquired a substantial stake in Beats Audio, a company started by  Jimmy Iovine and Dr. Dre, is said to be working with Iovine, a music industry iconoclast to develop a streaming service that will be offered as a default music client on HTC phones and tablets. My sources say that the company is still working on pricing plans and other details. It has long harbored ambitions of offering a music service on HTC devices, folks familiar with HTC say. A spokesperson said that the company doesn’t comment on rumors and speculation.

In an interview with The Los Angeles Times last year, Iovine had said:

“Getting Beats audio into HTC phones is one of the first things we’re going to do…We are going to be in business with HTC and they’re going to help us and were going to help them in every way they can. And you’ll see Beats audio in just about every phone or tablet they want it to be in, but they know what we’ve built and respect the brand and will help us continue to innovate and push Beats further.”

HTC in the past is said to have held talks with companies such as Spotify, but those talks didn’t go anywhere. Iovine is perhaps one man who could get the record labels to sign up for this streaming service. Interscope Geffen A&M Chairman Iovine is viewed as one of the most powerful men in the music industry. Apparently Iovine isn’t a fan of Spotify. Many executives in the music industry are fearful of creating an iTunes-like monopoly in Spotify and thus can band together.

The company is also working on a wireless boombox that would most likely stream music from HTC phones over Bluetooth. The company currently sells a wireless boombox that is made by Monster, till recently a partner of Beats Audio. Iovine has been very public about his desire to go after other audio products as well. Beats Audio recently had a very public and ugly divorce from Monster, the stereo accessory maker. In January Business Week reported:

Though both companies publicly say the separation is amicable, the relationship turned sour over financial terms, with divergent views on which side deserves the most credit for the line’s success and Beats balking at its share of the revenue, according to two people who asked not to be identified because the talks were private. While Monster manufactures and helped design the headphones, and even takes credit for the idea …. “We have very big ambitions for Beats beyond headphones,” says Iovine. “Music has got to succeed on the phone or else the record industry will never thrive.”

But back to the music service — my sources say that it could be launched later this month at Mobile World Congress. In addition to the streaming service, HTC is going to announce a number of new products including a new tablet , at the trade show in Barcelona. During a recent conference call with analysts, the company indicated that it would be making a major push during Mobile World Congress and is said to working on LTE-based devices. LTE is the newest wireless broadband technology and a growing number of mobile carriers including Verizon and AT&T have launched superfast networks. These new phones are likely to hit shelves in the second quarter of 2012 as the company tries to stave off competition, my sources say.

HTC has seen softening of its business in recent months, something I had outlined in a post back in August 2011. The company is being squeezed by low-cost Chinese handset makers like Huawei and ZTE Corp on one end and Samsung on the top end of the market. During the fourth quarter of 2011, HTC reported miserable results. Things aren’t looking well for the company during the first three months of 2012 either.

Sources say that HTC is betting that new services could become a point of differentiation for the company, and thus help bolster its revenues. Stay tuned.