Google is
making another big buy into Smartphone hardware — or at least the people
responsible for creating it. The company has just confirmed that it
plans to acquire part of HTC’s mobile division team for $1.1 billion. “These
future fellow Googlers are amazing folks we’ve already been working with
closely on the Pixel Smartphone line, and we're excited to see what we can do
together as one team,” Rick Osterloh, Google’s hardware boss, wrote in a blog
post. “The deal also includes a non-exclusive license for HTC intellectual
property.”
Peter
Shen, HTC’s chief financial officer, said that HTC would still employ more than
2,000 research and design staffers after the deal is done, down from around
4,000, according to the New York Times. That makes today’s announcement more of an acquihire
of talent than a traditional acquisition of resources.
HTC will
continue onward with its own smartphone business even after sending a good
portion of its talent and operations over to Google. HTC CEO Cher Wang said
that this agreement will “ensure continued innovation within our HTC smartphone
and Vive virtual reality business.” In fact, HTC’s press release reveals that
the company is already “actively preparing” for its next flagship
smartphone. A major announcement was all but assured Wednesday, when HTC
announced it would briefly halt trading on the Taiwan stock exchange
ahead of “material information” to come on Thursday (local time).
This is
the second time that Google has made a big purchase involving a smartphone
manufacturer. Six years ago, Google announced a $12.5 billion buyout of
Motorola Mobility. “Together, we will create amazing user experiences that
supercharge the entire Android ecosystem for the benefit of consumers, partners
and developers everywhere,” said then-Google CEO Larry Page.
HTC is
also closely tied to the debut of 4G cellular networks in the United States.
Its Evo 4G was the initial device to support Sprint’s now-defunct WiMax
standard. In 2011, HTC made a more significant technological splash with the
Thunderbolt, which was the first-ever LTE smartphone on Verizon Wireless. In
the years since, HTC has had its share of fan favorites (One M7, HTC 10, U11) and
miscalculations (One M8, U Ultra).
But
despite the company’s proven ability to design and produce excellent hardware,
HTC has in recent years been unable to release a hit with consumers that
approaches sales of Samsung’s Android phones or the iPhone. That considered,
it’s a bit surprising that HTC will keep going with its own smartphone unit
even after this arrangement with Google, which is expected to be completed
early next year.
Google’s
next hardware products, set to include the HTC-made Pixel 2, Pixel 2 XL
(manufactured by LG), Google Home Mini, and Pixelbook will be unveiled at an
October 4th event in San Francisco.
In a strategic move to bolster its hardware capabilities,
Google announced the acquisition of a significant portion of HTC's smartphone
team for $1.1 billion. This deal, finalized in 2017, involved HTC employees,
many of whom had already been working on Google's flagship Pixel smartphones.
By bringing these skilled professionals in-house, Google aimed to enhance its
hardware development, streamline production, and better integrate software and
hardware—a strategy reminiscent of Apple's successful approach.
The acquisition also included a non-exclusive license for
HTC's intellectual property, allowing Google to leverage HTC's innovations
without complete ownership. This aspect of the deal highlighted Google's focus
on rapid innovation and market adaptability. HTC, on the other hand, benefited
from a substantial cash infusion, enabling it to stabilize its finances and
refocus on its core business areas, such as virtual reality, where it had seen
significant success with the HTC Vive.
For Google, this acquisition was a crucial step
toward solidifying its position in the competitive smartphone market. By
directly controlling more of the smartphone design and manufacturing process,
Google could ensure a more seamless user experience, faster software updates,
and greater innovation. This move also underscored Google's commitment to
becoming a major player in hardware, complementing its dominance in software
and services.
