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Thursday, 21 September 2017 13:50

Google tries hand at buying another phone company: HTC

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Ok, ok, so it’s a US$1.1 billion “co-operation agreement”, with Google getting some HTC staff and a non-exclusive licence for HTC intellectual property, but let’s face it, this is Google’s second phone company purchase.

“Certain” HTC employees, many of whom worked on Pixel smartphones, are going to join Google, which will go ogle some of HTC’s intellectual property, with the transaction apparently “reinforcing HTC’s commitment to innovation and its branded smartphone business".

After all, US$1.1 billion is a lot of money, and it’s going to be in cash too, “as part of the transaction".

We’re told the agreement “is a testament to the decade-long strategic relationship between HTC and Google around the development of premium smartphones".

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It also “supports HTC’s continued branded smartphone strategy, enabling a more streamlined product portfolio, greater operational efficiency, and financial flexibility".

HTC assures us that it will “continue to have best-in-class engineering talent, which is currently working on the next flagship phone, following the successful launch of the HTC U11 earlier this year".

In addition, HTC says it will “also continue to build the virtual reality ecosystem to grow its VIVE business, while investing in other next-generation technologies, including the Internet of Things, augmented reality and artificial intelligence".

So, what does it all mean for Google, which is now not only ogling its second phone company, but has basically bought its way into a second one?

Well, we’re told that “this agreement further reinforces (Google’s) commitment to smartphones and overall investment in its emerging hardware business.”

And, in addition to “the talented and experienced team of professionals, Google will continue to have access to HTC’s IP to support the Pixel smartphone family”, while it also “represents a significant investment by Google in Taiwan as a key innovation and technology hub".

Cher Wang, chairperson and chief executive of HTC said: “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.

“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 realise the potential of a new generation of connected products and services.”

It’s clear that Wang cares about the future of HTC, and given HTC’s long heritage in smartphones but its inability to turn its smartphone business around back to the heights it enjoyed during the Windows Mobile days, monetising this part of its business through a deal with Google was the best option for HTC’s future survival, especially in the hope of seeing Vive thrive.

Meanwhile, Rick Osterloh, senior vice-president of Hardware at Google, said: “HTC has been a longtime partner of Google and has created some of the most beautiful, premium devices on the market. We're excited and can't wait to welcome members of the HTC team who will be joining Google to fuel further innovation and future product development in consumer hardware.”

The transaction is naturally “subject to regulatory approvals and customary closing conditions”, and is “expected to close by early 2018".

Legal eagles will care that “Evercore served as financial adviser to HTC and Gibson Dunn and Tsar & Tsai acted as legal counsel. Lazard served as financial adviser to Google and Cleary Gottlieb and Lee & Li acted as legal counsel".


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Alex Zaharov-Reutt

Alex Zaharov-Reutt is iTWire's Technology Editor is one of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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