Alphabet Inc. subsidiary Google has just confirmed that it plans to make a $1.1 billion investment in the smartphone hardware industry.
Rather than start from scratch and building its own infrastructure, Google is about to acquire part of Taiwan-based HTC’s mobile operations, with approximately 2,000 HTC staff making the move across to work directly for Google.
Google already has a working hardware relationship with HTC. The companies have been working very closely together to develop the Google Pixel smartphone line since last year, with Google’s hardware boss Rick Osterloh suggesting that everyone involved in Pixel is looking forward to moving forward as a single entity:
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. The deal also includes a non-exclusive license for HTC intellectual property.
The interesting thing about this particular deal is that it seems to suit both sides perfectly. Google may be stumping up $1.1 billion for the acquisition, but for that amount, it gets an in-house team with experience of Pixel and the expertise required to continue pushing out innovative and exciting Pixel iterations under the Google brand. HTC, on the other hand, will continue to operate in the same space that it’s currently involved in with the company’s Chief Financial Officer, Peter Shen, confirming that the company will hold onto approximately 2,000 researchers and design staff and that the deal means HTC can ensure “continued innovation within our HTC smartphone and Vive virtual reality business.”
Google is well-known for the $12.5 billion purchase of Motorola under then CEO Larry Page back in 2011. Eyebrows were raised at that purchase at the time, which turned out to be well-placed with Google passing the company on to Lenovo just three years later in 2014 for mere $2.91 billion.
All-in-all, this move seems to be a great one for both parties, and it doesn’t take a genius to figure out that Google likely wants to get back into hardware game to take on Apple’s iPhone. With this acquisition, HTC gets an immediate cash injection that it badly needs and continues to push out products into the smartphone industry, whereas Google gets a few steps closer to actually following in Apple’s footsteps of building hardware and software in alignment and achieving that holy grail of user-experiences. It will be extremely interesting to see what Google introduces next.
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