Google has signed an agreement with HTC under which a team of HTC engineers will join Google’s hardware organization, according to a blog post by Rick Osterloh, senior vice president for hardware at Google. He notes that when he joined the company a year and a half ago, he worked to bring together the company’s hardware-related efforts into a single hardware organization, which the HTC engineers will join.
“These future fellow Googlers are amazing folks [whom] we’ve already been working with closely on the Pixel smartphone line, and we’re excited to see what we can do together as one team,” he writes. “The deal also includes a nonexclusive license for HTC intellectual property.”
He cites a decade of Google working with HTC, resulting in “…the first ever Android smartphone, the HTC Dream, also known as the T-Mobile G1….” He also cites the Nexus One in 2010, the Nexus 9 tablet in 2014, and the first Pixel smartphone last year—the second is expected to launch October 4.
HTC says that as part of the transaction it will receive from Google $1.1 billion—“Not that $1.1 billion is a heavy sum for a company with nearly $91 billion in net cash on hand,” write Dan Gallagher and Jacky Wong in The Wall Street Journal. “Alphabet Inc.’s Google actually spent 12 times as much six years ago to buy Motorola Mobility. But that purchase was more about acquiring patents than about dabbling in phone hardware, and Google got out three years later, after Motorola racked up a cumulative pretax operating loss of $2.7 billion.”
Gallagher and Wong see this week’s deal as “less risky” than the Motorola deal. They write, “Increasing the Pixel’s share of just the premium segment would benefit the features and services Google is looking to deploy for all Android phones—such as its artificial-intelligence-powered Google Assistant software—and so help keep Android users on board.”
HTC will remain in the smartphone business and reports it is currently working on its next flagship phone. “As a pioneer of the smartphone market, we are very proud of our history of innovation. Our unmatched smartphone value chain, including our IP portfolio, and world-class talent and system integration capabilities, have supported Google in bolstering the Android market,” said Cher Wang, HTC chairwoman and CEO. “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. We believe HTC is well positioned to maintain our rich legacy of innovation and realize the potential of a new generation of connected products and services.”