You should check your premise. With companies like Bose and Bang & Olufson around for several decades, it's hard to imagine how your claim that they entered a market where every company was focused on sound quality first could be true.

The ingenious thing that Beats by Dre did was market the Bose sound and product to fans of hip hop, R&B, and pop electronica. All three of these genres, with their particularly die-hard listening audience, had never been able to be penetrated by a prior audio product besides extremely cheap Skullcandy offerings and the like. The profit margins are considerably higher on a $300 pair of headphones than on a $25 pair of headphones - especially if the Skullcandy and Beats by Dre options are capable of providing an equally-high fidelity output.

As an audio engineer, this of course makes me sad. But it is indeed genius.