Google has just announced it will buy the HTC's Pixel team for $1.1 billion in cash. The news comes after months of speculation around the agreement between the Taiwanese phone company and the tech giant.
The HTC Pixel team is a research and development wing of the company that has been responsible for Google's Pixel and Pixel XL smartphones. As part of the sale, about half of the HTC pixel team will move to Google to continue their work. In addition to this large number of staff, the sale agreement also gives Google a non-exclusive license for a big chunk of HTC's intellectual property. Not all details of the deal have been released but it is reportedly approved and will be officially recognized in 2018.
HTC will continue to make its own smartphones
HTC have been adamant that the sale doesn't mean the end of their own product lines. The smartphone company will continue to make its own HTC handsets, HTC co-founder and CEO Cher Wang explains the deal, saying, "This agreement is a brilliant next step in our longstanding partnership, enabling Google to supercharge their hardware business while ensuring continued innovation within our HTC smartphone and Vive virtual reality businesses.” The companies have had a long relationship and rumors around the sale were at an all-time high yesterday when HTC announced it would halt trading on its shares on the Taiwan Stock Exchange in preparation for a ‘major announcement’.
Google SVP of Hardware Rick Osterloh said the two companies are yet to determine exactly where the former HTC/new Google employees will work from, but that they are hoping for a smooth transition. The staff that doesn't go over to Google will remain with HTC and work on developing its own smartphone lines and VR technology. But what does this all mean? Basically, we can see this as one step in Google's plan to develop a wider range of physical devices that are set to directly compete with Apple and Amazon products.
Osterloh spoke at the press conference to announce the deal saying, "We think this is a very important step for Google in our hardware efforts. We've been focusing on building our core capabilities. But with this agreement, we're taking a very large leap forward." It is expected that the roughly 2000 new engineers Google will get as part of the deal will be tasked with designing more internet-connected devices similar to Google Home. Google Home is a voice-activated assistant much like the Amazon Echo.
The deal means that HTC can continue to operate. The smartphone company has been steadily losing market share over the last decade falling to less than 1% of the global smartphone market last year. The sale of its research and development arm means the company can continue to survive and continue to develop new products albeit in a slightly smaller capacity. Neil Shah, research director at Counterpoint Technology Market Research described Google’s motivation to complete the sale, saying, it's "a business decision to have access to one of the best R&D teams," But it's also "a sort of emotional decision to save its close partners." Google has tried to buy into the device market before with little success. We’ll be keeping a close eye on what the newly minted Google team can do.