Just three months ago, HTC shelled out $300 million to acquire headphone giant, Beats By Dre. Once the acquisition was complete, there was tremendous buzz circling the mobilesphere about the Chinese mobile manufacturer putting out a new Android phone with Beats audio technology. Well, the rumors turned to be true, as the company released the first-ever Beats-ready smartphone in Europe and Asia dubbed the Sensation XL. While the handset literally became an overseas sensation, HTC secretly began work on its US version—surprising everyone during its recent “Latest Innovation” showcase with the announcement of the HTC Rezound.

Sporting a ridiculous spec sheet consisting of LTE capability, a 1.5 dual-core CPU, and Beats audio integration, the Verizon-exclusive seems like a holiday hit. After getting a hands-on with the device at the exclusive media event, we caught up with HTC’s President of Global Sales and Marketing, Jason Mackenzie, and Beats’ President and COO Luke Wood to discuss the phone, the new partnership, Beats mobile quality, and more. 

How did the partnership between HTC and Beats By Dre come together?

JM: Literally, Luke and I had been talking, and we came together at CES, and introduced Peter [Chou] and Jimmy [Iovine] together. And in the meeting we decided that we should actually work together and try to build a deeper relationship.

LW: Jason and I started speaking a little over a year ago, about things we could do for marketing initiatives. And then it just grew into bigger and bolder ambitions. When we started thinking about playback, it was so clear that all consumption was moving towards the smartphone. That is going to become the one device that you have. And when we had thought about the smartphone—we thought about HTC because they’re innovative, hungry, they’re like us in how they move quickly, and ambitious in that they care about the customer. We could not be more thrilled with the partnership and what it’s going to bring for both brands.

The Rezound is exclusive to Verizon. What made HTC choose Big Red over the other major mobile carriers?

JM: We have great products across all of our carriers, and that’s important for HTC, to deliver choice. With Verizon on the Rezound, it just made sense. Luke and Jimmy had been talking to Verizon over a year, two years ago, as well around this problem. So there’s a relationship already set up between Beats and Verizon, and we needed to deliver a killer product that could really do well around the holidays for Verizon and HTC. So it just made sense, and with the 4G LTE network, it brings it all together because it’s not just about the music or movies you’re bringing in—it’s about having the ability to actually download that content and play or stream it to your device quickly.

Not too long ago, HTC released internationally the first official smartphone with Beats integration: the Sensation XL. Are we talking about the same phone?

JM: They’re two entirely separate designs. The Sensation XL for example has a 4.7-inch display that doesn’t offer a higher resolution, where the Rezound is a 4.3-inch display and is really more mainstream in terms of the size. They carry different specs as well.

Some consumers might fall under the impression that since the Rezound is a smartphone, it might lack the capability of producing the same dynamic audio performance as Beats headphones. Seeing how the company is considered the leading outlet for on-the-go audio technology: What should they expect from HTC’s handset?

LW: With any playback device, especially a digital one, you have to usher the sound through the electronics. And in that process there are a couple of things going on. One is software, which is digital signal process, and our approach to software and what we do with Beats audio is to make it as efficient and as close to what we hear in the studio. So the idea with software is to be very light and efficient to be able to do that.

On the hardware side, we worked closely with HTC to maximize all the components of the device around sound. For most hardware, in the past 8 years, sound has been the bastard stepchild. It’s all about the display: “Is it HD?” or “how fast does it go?” And for us, we really focused with HTC to work on maximizing the hardware and sound.

Let’s talk design. The Beats brand is popular for having its own unique style. But when looking at the Rezound, it actually resembles the Droid Incredible series. Being that both companies worked closely on the development end: Was it a joint decision to run with the Incredible-like finish or had there been discussions about creating an entirely new design for the phone?

LW: The design of the device is 100 percent owned by HTC. So it doesn’t mean in the future of our partnership, we might not do other things in that area, but right now we design the headphones and do the sound with them. But as far design, it’s their device.

For most [phones], in the past eight years, sound has been the bastard stepchild. We really focused with HTC to work on maximizing the hardware and sound.

Right now the phone is tagged at $299. When you really think about, that’s a steal because a pair of standalone Beats run for nearly the same price. How hard was it to finalize the price of the Rezound?

JM: Price is something you always spend a lot of time on. It’s critical. We wanted to price it at a mass market [value] where our core audience could afford it and be desirable. So if you look at pricing today, you typically have the premium smartphones: $199. We’re adding that $100 value with the Beats headphones included. So $299 felt like a really good place to be where a customer could walk out with a good value. Now they bought something that’s good quality from the entire phone to the headphones.

LW: Also, the headphones are a custom colorway and they also have the control functionality, so you can pause your call or skip tracks. It’s really a great pairing for the device.

So Luke, the Beats by Dre store is officially open for business in SoHo. Are there any plans of selling the Rezound in-store?

LW: Are we allowed to sell it in-store? [Laughs]

JM: It would seem easy, but it’s pretty complex. You have the carrier there, the data and everything. We would love to. The problem is you have to have the billing infrastructure set up through Verizon to where they can actually do the activations. If we sold them, we would have to sell them at a much higher price because you wouldn’t have the subsidy that Verizon puts on it.

LW: It’s obviously different staff training. [Laughs]

What about the headphones?

LW: No. Those are exclusive to the Rezound. It’s the “EarBeat,” which is as good as any headphones around that price category, but it’s exclusive to this phone.

What compelled Beats to develop an exclusive pair of in-ear headphones for the Rezound?

LW:  It was very important to HTC and Beats to offer a bundle and complete sound solution out of the box. And if you’re gonna do that, make it exclusive and unique. Every chance Beats has, we try to make stuff in different colors.

Considering Google’s OS is an open-source platform, would you say the flexibility and minimal restrictions played a huge influence in Beats decision to work with HTC?

LW: It’s a piece of it. Android’s a great operating system with incredible opportunity for sound because it’s so popular with a huge install base. And they’re all music fans. The truth is we wanted to work with a manufacturer who really had the ambition and the dream, similar to Beats. Pure imagination: that’s our palette. And HTC thinks that way. They work with Android and they also work on Windows. But whatever OS it’s going to be, we know that HTC is going to push us, and themselves, to fully maximize the operating system.

The phone is set to launch Ice Cream Sandwich-ready. Should we expect an ICS update by the end of the year?

JM: The software hasn’t been released yet. We don’t have it. The way Google handles that is as soon as that first product launches, they distribute the software to everyone. Historically, HTC is very fast in updating our customers. In fact, I think CNET did a thing where they looked at how fast each of the manufacturers was in upgrading and HTC came out on top. It’s hard to commit to it, but what we talked about with Verizon is as soon as we get that software, we’ll be integrating it and are expected to go into their labs before the end of the year. God willing. So we’re looking to get that pushed out to our customers in early 2012.

Are there any special features being developed specifically tailored for Android’s new software?

JM: What we’re committed to do is give you the power of whatever that release is, whether it’s Gingerbread or ICS, but then add on with Sense. So we’ll have the latest version of HTC Sesne paired with ICS. There might be things that we’ve done that are now taken care of in ICS, so we won’t highlight that through Sense, but we’re trying to plug holes and add more value for consumers for when they buy the phone.

What about audio? Should we expect enhancements in the audio experience moving into the future?

JM: We’ll enhance. I can’t go into details about it, but what I can say is this is our first showcase of Beats. We’re gonna continue to improve. Our organizations are getting closer and really starting to figure out how do we do a better job at integration. So I think you’ll see that sound transcend into other things, non-music related, gaming, movies, and that other stuff I talked about. It’s just one piece of the puzzle.

LW: For Beats and HTC, we made a forever commitment.