HTC U Ultra

Google buys HTC’s Pixel team for USD1.1 billion; HTC continues to make own phones

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It looks like Google is giving the device hardware business another go. As reported a day ago, there was speculation about HTC’s future, with the Taiwanese company suspending trading its shares on the TWSE. Well, the rumours have been laid to rest. Google is “buying” HTC, but the extent of the deal isn’t as originally expected.

In a blog post, Rick Osterloh, senior vice president of hardware at Google said, “Our team’s goal is to offer the best Google experience–across hardware, software and services–to people around the world.”

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Osterloh revealed that Google has signed an agreement with HTC, where a team of HTC talent will join Google’s hardware business. These are people who worked on the Pixel smartphone line, apparently 2,000-strong.

This drains HTC’s research and design staffers down from 4,000 currently. The acquisition is worth USD1.1 billion and is expected to be completed early next year.

Aside from the talent hire, the deal also includes a non-exclusive license for HTC intellectual property.

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HTC 10

How does this affect HTC?

So, the “buyout” isn’t a hook, line and sinker deal, which means HTC can continue making its own smartphones and Vive VR business.

HTC CEO Cher Wang said the company is already “actively preparing” for its next flagship phone. I see a sigh of relief from some HTC fans.

The question in my mind is that, now that Google’s pinching the best talents from HTC, how is the ailing smartphone company dealing with the brain drain?

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Sure, the deal will give it some monetary injection for the short term (which isn’t much in the first place), but it still does not instill confidence in the future of HTC’s smartphone business.

The once one of the top smartphone brands has been struggling, despite its proven ability to design and produce some excellent products. The HTC One M7, HTC 10 and U11 are some of the best devices the industry has seen.

HTC U11

The fiercely competitive smartphone business hasn’t aided the company’s troubles, either. Granted, recent products like the critically-acclaimed U 11 shows the company can make great devices (squeezing capabilities aside).

Sales has been lacklustre, and not the sort that can help the company turnaround in both short or long term.

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The fact is, HTC has zero marketing muscle to challenge Apple and Samsung in the premium top end. As a comparison, a single Samsung flagship smartphone campaign is equal to what HTC spends in a year.

Meanwhile, HTC has no answer to cheaper, and more often, better spec-ed devices from the Chinese camp.

IMHO, the deal looks a little one-side, as it seemingly favours Google more. Undeniably, Google has ambitions to deliver better software-hardware integration in its products, something Apple has enjoyed from the get go.

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Google has traditionally worked with OEM partners on its various product lines.

Google Nexus 6P

For its previous Nexus line of devices, it has worked with HTC, LG, Samsung, ASUS, Huawei and Motorola. HTC built the first Android–the Dream (aka T-Mobile G1 in the US), Nexus One, Nexus 9 tablet, and the Pixel.

The Pixel range introduced last year, was its first foray into a Google-branded smartphone line. It was an important first step for Google, where it took control of the entire development process of the device.

The coming Pixel 2 will also be built by HTC (LG is making the Pixel 2 XL).

Google Home

Google hardware 2.0

Compared to what it paid for Motorola Mobility in 2012, the HTC deal is spare change for Google. Attaining HTC’s hardware design and engineering expertise without the baggage of owning manufacturing facilities is a smart move.

“We’re excited about the 2017 lineup, but even more inspired by what’s in store over the next five, 10, even 20 years. Creating beautiful products that people rely on every single day is a journey, and we are investing for the long run”

Google is expected to introduce the new Pixel 2 line, Google Home Mini and Pixelbook at a 4 October event in San Francisco.

What do you think of the deal? What are your thoughts on HTC’s future?

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