It’s been rumoured for some time that Google is interested in taking over HTC, at least for its phone-making business. Today, the Taiwanese firm announced that its shares are being suspended on the Taiwan Stock Exchange.
The trading ban has aroused speculation that a deal may have been struck.
Android pioneer
Google and HTC go back a long way. The Taiwanese company made the first ever Android smartphone – the Dream. HTC continued to drive Android, and at its peak in 2011, it was the #1 smartphone brand in the U.S.
HTC also gave us the excellent Nexus One, a first of many hardware collaborations with Google.
But how far it has fallen. Its share price has dropped 94% since its glory days in 2011. Then in 2015, its share price collapsed and subsequently saw itself getting ejected from the Taiwan’s TWSE 50 Index.
Such is the nature of the smartphone business, where the giants fall (cue BlackBerry and Nokia) and nascent players like OPPO, Huawei and Xiaomi rise and rule.
HTC found themselves outgunned by the likes of Apple and Samsung in the premium top end. Meanwhile, in the mid-tier and value segment, it found itself slaughtered by the Chinese tsunami.
Sure, it rolled out some pretty sexy devices in its heyday–devices like the stunning HTC One M7 and M8, as well as the water-resistant HTC Butterfly 2 (all three are still personal favourites).
HTC has clearly demonstrated its design and engineering prowess, so much so it continues to be entrusted by Google to build its Nexus/Pixel devices.
For the record, HTC built the Google Nexus One and Nexus 9 tablet. The upcoming Google Pixel 2 phone is expected to be made by HTC.
As you know, Google works with various OEM hardware partners for its line of devices, including LG, Samsung, ASUS, Huawei and Motorola. The only big name that’s missing from the line-up is Sony Mobile.
While it has since killed the Nexus brand, the new Pixel smartphone and device line-up paves the way forward for Google’s hardware business. Pixel is ultimately a showcase of the best implementation of Android, featuring the best hardware.
By buying a hardware manufacturer, Google can gain tighter control over production. Also, giving it better software-hardware integration, much like Apple does.
Déjà vu much?
But Google has been down this road before. It paid a hefty USD12.5 billion for Motorola Mobility in 2012, then a leading Android phone maker. The search giant then sold it off to Lenovo Group sans patents for under USD3 billion, all in a span of less than three years.
The industry saw a similar move by Microsoft, who acquired Nokia’s mobile business. We know how that turned out. OK, hint: not very well.
While its purchase of Motorola Mobility was for its patents, that isn’t the reason Google wants HTC for.
What happens now?
Renowned internet leaker Evan Blass has revealed that Google will indeed acquire some HTC hardware assets, although HTC gets to keep its brand. An alleged HTC employee town hall meeting will happen tomorrow with more details.
It’s highly likely Google will attain HTC’s hardware design and engineering expertise, as well as production facilities. HTC, on the other hand, gets to keep its Vive VR headset business, which has been spun off earlier.
Pure speculation at this point. What if, it was the other way around? What if Google bought the Vive business instead? Who knows.
While the Google deal may provide a much-needed lifeline to the struggling phone maker, HTC’s future as a branded phone maker is as precarious as ever.
In all honesty, it will be sad to see the HTC brand missing from the shelves (not that we’ve seen much of it in recent times). Granted, we’ve seen some great innovation from the Taiwan brand.
The latest HTC U11, its best smartphone to date, is a testament of what it can bring to the plate.
But as it stands, sometimes innovation isn’t nearly enough to guarantee sales and success.
More updates tomorrow.
Source: The Guardian, Evan Blass, Bloomberg
