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Google buys HTC’s Smartphone Business for US$1.1b
September 25, 2017
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Google confirmed that it plans to buy a portion of Taiwan based HTC for $1.1b in order to supplement the development of its Pixel smartphone line.  The all-cash deal will include 2,000 HTC employees, or about 20% of HTC’s staff, and a non-exclusive license to HTC IP, with an eye toward further collaboration down the road.  The R&D personnel involved have already been working with Google on the design of the Pixel smartphones, and the addition of the hardware design team affirms Google’s commitment to the smartphone business ahead of the October 4 announcement of the Pixel 2 phones and a new Chromebook.  The original Google Pixel and Pixel XL smartphones were released in October 2016 and received mixed reviews, with price ($713/$832 depending on memory – XL $856/$975), putting it roughly in-line with the iPhone 7. Although Google does not reveal sales numbers, 1 million units were the consensus sales estimate, although IDC estimated ~2.8m units sold.   Google previously purchased Motorola Mobility for $12.5b, in an attempt to control the over 25,000 patents held by Motorola in IP software and hardware battles with Apple and Microsoft but later sold the business for under $3b to Lenovo, moving out of the smartphone hardware business.  With the HTC purchase Google is back in but HTC’s share of the smartphone market has declined from an 8.8% peak in 2011 to under 1% today. HTC kept its VR business and now has the capital to fund future development of the Vive VR handset.  But HTC could likely suffer the same experience as it did with the smartphone, given that the major players, Facebook, Google, Sony, Apple, Microsoft and Samsung are spending big bucks to play in the market, which many believe will be the next reincarnation of the smartphone.