Google Buys Part of HTC, Expands Hardware Manufacturing Capabilities

Image Credit: Droidhere

Google Senior Vice President of Hardware, Rick Osterloh, confirmed in a blog post that the company has acquired a team of engineers and other assets from HTC. Bloomberg’s Mark Bergen summed it up nicely:

Alphabet Inc.’s Google is taking on HTC employees including teams that’ve worked on its signature Pixel smartphone. The deal also comes with a non-exclusive licensing agreement for HTC intellectual property, the companies said in a statement.

Google Assistant Needs Hardware Showpieces

The total acquisition cost is $1.1 billion according to Bloomberg. Mr. Osterloh emphasized the importance of Google’s move into solutions with tight integration of hardware and software. This includes Pixel smartphone along with Google Home, Google Wifi and Chromecast Ultra. Note that the only software called out is Google Assistant. It is the glue that creates value and coherence across all of the company’s hardware products.

We’re focused on building our core capabilities, while creating a portfolio of products that offers people a unique yet delightful experience only made possible by bringing together the best of Google software—like the Google Assistant—with thoughtfully designed hardware.

Mr. Osterloh also pointed out that the second generation of these products would be coming on October 4th. He didn’t mention that the Google Home Mini is expected to be among the announcements.

This is Not the Motorola Deal

Many people will be tempted to equate the HTC deal with the earlier Motorola acquisition that Google subsequently unwound. That seems like a mistake. Google is only acquiring part of HTC compared to all of Motorola. HTC has included licensing of some intellectual property but not full ownership. It is a different time with a different set of competitive dynamics in the market.

However, the biggest difference may be that Google needed to rescue its Pixel operation from HTC before the company was financially crippled. HTC was not doing well and Pixel is an import part of Google’s current strategy. Acquiring the HTC Pixel team will enable Google to have more control over design and production while ensuring all of its efforts aren’t taken down by a financial disaster facing a key manufacturing partner. It is more questionable whether this move will have implications for Google’s other hardware products. A smartphone is a far different device than a smart speaker.

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