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Google and HTC Announce US$1.1 Billion Cooperation Agreement

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Google and HTC Announce US$1.1 Billion Cooperation Agreement

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After several reports that Google will take over HTC’s mobile division, Google has just announced a deal with HTC. In a statement released by the search engine giant, Google, the majority of the personnel working in HTC mobile division will now work for Google in a deal worth US$1.1 billion. Moreover, Google will, “receive a non-exclusive license for HTC intellectual property (IP).”

In a statement, Google has said

Google and HTC Corporation today announced a definitive agreement under which certain HTC employees – many of whom are already working with Google to develop Pixel smartphones – will join Google. HTC will receive US$1.1 billion in cash from Google as part of the transaction.

This deal doesn’t mean that HTC will shut shop in its smartphone department. HTC CEO Cher Wang said that this agreement will “ensure continued innovation within our HTC smartphone and Vive virtual reality business.” Google concedes that this deal is a testament “to the decade-long strategic relationship between HTC and Google around the development of premium smartphones.”

The transaction is expected to close by early 2018, subject to regulatory approvals.

This is not the first time that Google has taken charge of the hardware for its smartphone lineup. Six years ago, Google announced a US$12.5 billion buyout of Motorola Mobility. However, after opening a manufacturing plant in the United States, Google decided to sell Motorola Mobility to Lenovo for a fraction of the price it bought Moto for. The takeover made Motorola into an amazing smartphone manufacturer and has continued to thrive in the smartphone industry since then.

HTC’s flailing smartphone share and tumbling sales in the past few years made people talk about a possible takeover by Google of its smartphone department while HTC continues its work in the VR industry. In late August, reports emerged that a deal between Google and HTC will be announced by the end of 2017.

Rick Osterloh (Google) and Cher Wang (HTC)

This move by Google to buy off smartphone personnel from HTC could bring Google closer to achieving the hardware/software synergy that has worked so well for Apple and the iPhone. Although HTC and other Android smartphone makers still use off-the-shelf processors and other components in their handsets, Google snatched one of Apple’s chip architects earlier this year. This could be an attempt to evolve beyond that and design its own chip.

Meanwhile, Google’s two new flagship devices, the Pixel 2 and Pixel 2 XL are scheduled to be launched on October 4th. The Pixel 2 is made by HTC while the Pixel 2 XL with thin bezels and a tall display is made by LG.

 

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Vipul Vij
Vipul Vij