Google and HTC have officialized a deal under which a portion of HTC employees, many of whom were already working with Google developing Pixel phones, will join Google. As part of the agreement, HTC will receive US$1.1 billion in cash from Google. Conversely, the search giant and Android developer will receive a non-exclusive license for HTC intellectual property.
HTC will continue to operate its smartphone business separately, which according to the company has a team of engineers currently working on their next flagship phone to follow the HTC U11, which we recently reviewed and praised. HTC will also continue to work on Vive VR, Internet of Things, augmented reality and artificial intelligence, all of which will remain independent to the Google deal.
For Google, it's clear they are furthering their commitment to phone hardware and a decisive move following last year's launch of "Made by Google" products, evidenced by the shift from more barebones Nexus offerings to the Google Pixel and Pixel XL smartphones.
Google and HTC are no strangers as the two companies have collaborated on multiple occasions. The search giant commissioned HTC to build its first-gen Pixel smartphones. A recent FCC filing indicates that HTC is also manufacturing the smaller Pixel 2 (the XL variant is reportedly being developed by LG). Acquiring a hardware specialist like HTC seems like a smart move but we have to remember, Google has been down this road before and it didn't necessarily end well.
Pixel 2 in blue, Pixel 2 XL in white and black (Droidlife)
In mid-2011, Google purchased Motorola's mobile unit for $12.5 billion. Less than two years later, Google sold the division to Lenovo for a mere $2.91 billion, although it kept the entire Motorola Mobility patent portfolio which was likely the key reason Google wanted to buy Motorola in the first place.
In 2016, former Motorola president Rick Osterloh rejoined Google and was put in charge of a new hardware division. "HTC has been a longtime partner of Google and has created some of the most beautiful, premium devices on the market," said Rick Osterloh, Senior Vice President of Hardware at Google. "We're excited and can't wait to welcome members of the HTC team who will be joining Google to fuel further innovation and future product development in consumer hardware."
The transaction is subject to regulatory approvals and is expected to close by early 2018.
HTC to suspend trading of its shares ahead of major announcement
Google's acquisition of HTC is nearly ready for primetime. On Wednesday, the Taiwan Stock Exchange announced that trading of shares in the company will come to a halt on September 21 "pending the release of material information."
Rumors emerged earlier this month that Google was in the final stages of negotiating a deal to purchase HTC. Exactly what the deal entails, however, isn't yet known. Some have speculated that Google is only interested in select aspects of the business - perhaps the Vive VR division or the mobile sector. A full takeover of the entire company seems a bit less likely but still plausible.