"I think Beats wants to get back control of their fate, and indeed, HTC is thinking about changing their phone strategy," he said.

Integrating Beats technology into the smartphones added an additional selling point for HTC's phones. But the partnership was not enough to improve HTC's competitiveness against other rival smartphone providers, Wong said.

"Other handsets vendors are focusing more on content and services. I think this is a little more important than just equipment," he said. "Not everyone may have wanted that particular kind of headphone."

Financially, HTC has reported for the last three quarters. The company has partly attributed this to intense competition with Samsung and Apple. To add to its woes, HTC's newest handset was delayed in the U.S. earlier this year, the result of its patent battles with Apple.