Google will be paying $1.1 billion to HTC to acquire 2,000 of its employees and a non-exclusive intellectual property license. In a blog post, the company said the deal will help to “fuel even more product innovation” and allow it to “bet big” on its own hardware ambitions.
Google and HTC have long had a close relationship. HTC built the very first Android phone, branded as the T-Mobile G1. More recently, the company manufactured and helped to design the Google Pixel, the first “Made by Google” device. Google’s now purchasing the HTC teams responsible for the Pixel project.
The deal will give Google greater opportunity to build and refine its own smartphones. It gives the company a much larger and more experienced hardware team. The gap between its software engineers and the people building the hardware can be narrowed, giving Google the closest thing yet to an Apple-style unison between device and OS.
“With this agreement, a team of HTC talent will join Google as part of the hardware organization,” said Google. “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.”
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The acquisition also works in HTC’s favour. It’s been handed an extra $1.1 billion, money that’s desperately needed at the struggling firm. The company’s also got a new property licensing arrangement with Google and is free to work with other partners simultaneously.
Perhaps most significantly, HTC is retaining the remainder of its smartphone business, devoid of the group that worked on the Pixel. There will be more HTC devices going forward, ensuring the company doesn’t have to pull out of the industry it once headlined.
HTC now has a market share of just 0.9 percent, down from 8.8 percent at its peak in 2011. After rising to fame with its Windows Mobile handsets, HTC was quick to make the jump to Android. In the early days of the operating system, its phones were popular and continued to see strong sales. However, the company failed to respond to the growth of new rivals such as Samsung, eventually costing it the smartphone war.
With its finances still precarious and consumer awareness of its handsets dwindling, HTC’s outlook in the industry remains dismal. The deal with Google lets it keep its foot in the door though, maintaining a tenuous presence in the market while clinging onto its important manufacturing assets.
HTC will still be free to build its own handsets or accept outsourcing contracts from other brands. It’s likely Google will continue to use the firm to build new Pixel phones, although this year’s Pixel XL 2 contract has been granted to LG.
