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article imageReport: Google ready to buy HTC's failing smartphone business

By James Walker     Sep 8, 2017 in Technology
Google is close to purchasing HTC's smartphone business, according to a report today. The two firms are already linked as HTC produces Google's Pixel under contract. Google is stepping up its efforts to become a mobile hardware firm comparable to Apple.
The report comes from Taiwanese newspaper Commercial Times, via Digitimes. It follows a Bloomberg article last month that revealed HTC is exploring several options to revive its uncompetitive presence in the technology market. Bloomberg previously named Google as a potentially interested buyer but the earlier report suggested HTC was more interested in selling its Vive virtual reality business.
A sale of its smartphone division would mark the end of an era for HTC. The company was one of the pioneers in the field and for several years dominated the early Android ecosystem. It has since become a casualty of the market duopoly held by Apple and Samsung. In recent years, its sales have plummeted and its devices have failed to capture consumer interest.
Last year, HTC was given a breath of fresh air when it landed a Google contract to produce the Pixel. Google's now said to be interested in either becoming a strategic partner with HTC or buying out its smartphone business. Such a move could dramatically accelerate Google's thinly veiled intentions to become a mobile hardware brand in its own right.
At the launch of the Pixel last year, Google pointedly differentiated the phone from its previous Nexus handsets. The Pixel is meant to be a Google phone. According to the company, its relationship with HTC is comparable to that of Apple and Foxconn, the company that assembles the iPhone. Google is making no secret of its intention to directly rival Apple, building its own hardware and layering uniquely customised in-house software on the top.
The HTC 10
The HTC 10
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Purchasing the remnants of HTC's smartphone business would give Google the manufacturing flexibility it's looking for. By effectively bringing production in-house, it could even surmount Apple in one crucial regard. A true Google phone could also go a long way to remedying some of Android's fragmentation issues, a concern that Apple has never had to tackle with iOS.
Even with these prominent advantages, purchasing HTC would be an outlier acquisition for Google. The company has previously bought a smartphone company to bolster its own hardware efforts. In 2011, it acquired Motorola, before selling the firm to Lenovo just three years later.
It's unclear why Google abandoned the company given its current smartphone aspirations. None of the phones Motorola produced under Google were particularly big hits. However, it's unlikely a near-term HTC launch would fare any better.
The Commercial Times report comes after HTC posted its lowest monthly revenues in 13 years for August. Shipments of its smartphones fell dramatically after demand for its new U11 flagship peaked during July. As HTC's momentum falls sharply once again, the company is recognising the need for change. The deal with Google is said to be in the "final stage" of negotiation, implying the squeezable U11 may the last true HTC smartphone.
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