Google to purchase a chunk of HTC’s smartphone unit for approximately USD 1.1 billion

Alphabet’s acclaimed tech giant Google plans to make another big buyout in smartphone hardware by confirming its plans to acquire a part of HTC’s mobile division team. The business deal would be inclusive of HTC’s employees who have already worked on Google’s Pixel smartphone and a non-exclusive licensing contract for HTC IP (intellectual property) rights.

As a part of the transaction, the Taiwanese company HTC will receive USD 1.1 billion in cash from Google for this deal. This agreement is subject to regulatory approval and is expected to be closed by 2018.

With this new deal, Google is poised to gain better control over production of its smartphone - Pixel and other hardware devices. For the record, Pixel is the company’s smartphone offering, which was originally manufactured by HTC, while the entire in-house designing was undertaken by Google. This agreement would be inclusive of all the team members who were already working on the Pixel project, so that they would be able potentially help in rendering uninterrupted innovation. Pixel smartphones are now becoming a part of Google’s stronger backing, especially now that they will supercharge their hardware business to better compete with tech rival, Apple, Inc.

On other hand, HTC will continue executing its own smartphone business, and with this agreement, the company will innovate its smartphone and VIVE headset virtual reality business. HTC will also gain greater operational efficiency, financial flexibility, and a more streamlined product portfolio through this deal. Renowned to have sold one in ten smartphones on a global level at one point of time, HTC is now witnessing its market shares drop, in the face of heated competition from Samsung, Apple, and Chinese tech companies. HTC’s stock price this year has observed a sharp decline of 12% so far.

The global smartphone industry is now on the verge of witnessing a longstanding partnership between HTC and Google, both of which have been the pioneers of a premium range of devices. However, sources revealed that the Alphabet, Inc., investors are concerned about history repeating itself.

In context, Google in 2012 acquired a handset maker Motorola for USD 12.5 billion, only to sell it later in three years for less than USD 3 billion to Lenovo Group Ltd. Through this move, owning Motorola had eroded the search engine’s profit margins and disappointed the other phone makers that relied on Google’s software.

The search engine giant, Google, is preparing to launch a second generation of devices in October this year at an event in San Francisco, building on a portfolio that includes Pixel 2, Pixel 2 XL, a new PixelBook and a Google Home Mini.

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Ojaswita Kutepatil

Ojaswita Kutepatil develops content for Market Size Forecasters. A mechanical engineer by qualification, worked as a BDE and Technical Engineer before switching her profession to content writing. As an Associate Content writer, where she pens down write-ups pertaining to the market research industry...

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