Beats Audio has been a tremendous story. They have done for headphones and device sound what Intel did years ago for computing. And they leveraged celebrity endorsers and users to become ultra popular: Dre, Lady Gaga, Bieber, Lebron, etc. But the below advertisement really struck me. The HTC Android phone exclusively comes with Beats audio. It's powerful marketing because those red headphones and their logo stand out - particularly as you compare other devices on a store's shelves.
However, in this example, the 'hardware' is unfortunately less important and compelling than the software. As Intel made famous: it's what's inside that counts. And in that case: iTunes wins. And iTunes made the original iPhone so popular (before the app store).
For this to be very compelling, they would need to partner with a major music source in addition to the sound. That means that Google Music would need to ramp quickly or they work with Pandora, Spotify, Turntable.fm, etc... because sound without a great library and UI is just not that useful. Apple knows that.