Google Steals Away Key Smartphone Assets from HTC

Posted on September 21, 2017 by Paul Thurrott in Android with 17 Comments

Google Steals Away Key Smartphone Assets from HTC

Contrary to rumors, Google is not acquiring HTC. What it is doing, however, is stealing away about 2,000 employees from the struggling smartphone maker. Most were already working with Google on the Pixel family of handsets.

“We’ve signed an agreement with HTC, a leader in consumer electronics, that will fuel more product innovation in the years ahead,” Google senior vice president Rick Osterloh explains vaguely. “With this agreement, a team of HTC talent will join Google as part of the hardware organization. These future fellow Googlers are amazing folks 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. The deal also includes a non-exclusive license for HTC intellectual property.”

This team of people—which Reuters calls “HTC’s Pixel division” for some reason—comprises about 2,000 people, or about 1/5th of HTC’s total workforce.

The deal is decidedly in Google’s favor, and it shows that the search giant has learned from the mistakes of the past, both its own mistakes—Google previously lost $9.5 billion when it purchased and then sold Motorola at a loss—and Microsoft’s, which lost over $10 billion by buying Nokia.

This time around, Google is doing it the right way: It is acquiring the key assets it needs to take its in-house hardware-making efforts to the next level. So it gets key employees. But it is not buying the parts of HTC that have huge overheads, like its factories and manufacturing facilities.

What HTC gets in return is about $1.1 billion in cash. Which is something the hardware maker doesn’t need, as HTC already has plenty of cash. What it needs, and will not get, is profits and market share. I expect HTC to disappear within a few years.

Anyway, Google is set to announce its second-generation (and HTC-built) Pixel smartphones on October 4.

 

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Comments (17)

17 responses to “Google Steals Away Key Smartphone Assets from HTC”

  1. Snowsky419

    Only the medium-size Pixel 2 is going to be built by HTC. The larger Pixel 2 XL is going to be built by LG.

  2. Bats

    LOL...WAIT a SECOND.

    So, Google is going to pay HTC 1.1 billion dollars for something they have and they want. LOL...how exactly is that stealing? 

    Looks like a flat out purchase to me. LOL...not stealing.

    Ya know, Google buying Motorola was understandable. However, Microsoft buying Nokia was a pure head scratcher, laughable, and a knee-jerk reaction buy Ballmer because he hates (or envys) Google so much.

    Lastly, Paul expects that HTC will disappear within a few years? LOL...to paraphrase the words of a former President, "There he goes again." 

  3. pbruynzeel

    Well at least they found these people new jobs rather than just laying them off.

  4. skane2600

    Obviously Paul didn't literally mean "steal". What it implies, however, is that Google didn't really have a lot of expertise in smartphone HW development which may suggest Andy Rubin isn't all that qualified in HW either.

  5. Jim111

    While I agree that this deal doesn't auger well for HTC's long term viability, paying half a million dollars per person in recruiting costs for 2,000 people hardly seems like stealing...

  6. Peter Vassiliou

    The deal is certainly good for both partners. HTC needs the money and now they can continue working on new stuff. HTC will not go away anytime soon. Paul expects them to disappear, but actually nobody knows what will happen. They certainly get a lot of cash now. They must invest them wisely and maybe they will find a good place in the smartphone market.

    I wonder Paul, have you even tried the HTC U11? If you did, you would find out that it is one of the best phones out there. HTC needs better marketing...


  7. dhallman

    If HTC wants to become a Foxconn and exit (or reduce) sales of their own devices while focusing on logistics and manufacturing for other brands, then they just got a great head start with a major brand. I wonder if they got beyond phones (chromebooks? smart speakers?) with the deal? This mirrors Apple's approach as well. That is if Google can make a phone that people actually care about with version 3.

  8. 蔡孟耕

    HTC actually does need this urgent supply of cash... they're running low on money these days...

    But yeah it's just a temporary measure, and I think this deal doesn't spell well for HTC in any way in the long run...

  9. obarthelemy

    Seriously though:


    1- Google didn't steal anything. They bought something, with a contract, in exchange of money. You tryin' to sound gangsta or sumthin' ?


    2- The "Google lost $10b on Moto " myth has been thoroughly debunked:

    they paid $12.5b

    got $3b of Moto cash

    got $1b of tax credits

    got $2.5b for set-top box business

    got $3b for phone business

    final cost: $3b, for patents Google estimated at $5.5b (they might have been wrong on that valuation)

    But, Google didn't lose $9b on Moto. Nowhere near that, and they might have made money depending on how much the patents are actually worth.


    I'm very disappointed if this article. By far the most error-ridden I've ever read from you.

    • Roger Ramjet

      In reply to obarthelemy:

      Once you introduce the concept of "Moto Cash", you also have to account for any debt, which I don't see in your arithmetic, where did it end up. Also tax credits are not always worth face value, very contingent on whatever conditions were attached, etc, and doing all these deals back and forth to move Moto and parts around don't come cheap, Wall street charges a lot figure at least $400M in there for 4 deals. Not that I am saying Thurrott is right, in fact I more likely accept your numbers than his, he is not impressive with anything like adding or subtracting.

    • M. S. Chan

      In addition, when Google sold Motorola to Lenovo, they retained one division (I think it is Advanced Project division or something like that).


      Paul: you should be ashamed of perpetuating lies.


    • Nicholas Kathrein

      In reply to obarthelemy:

      I was going to write what you did. Thanks for saving me the time of researching the numbers. Google loosing all that money is what everyone thinks and just repeats.

    • MachineGunJohn

      In reply to obarthelemy:

      Google also had to actually pay a lot more by the time the acquisition was actually complete. It was closer to $14B

      Nor did he list the similar gains MS received from their Nokia purchase...


  10. wshwe

    It's too bad that HTC will go under. They were one of the real pioneers of the smartphone business. With this "sale" the heart of HTC is being moved over to Google.

  11. PincasX

    This is some definition of steal I was previously unaware of.


    While google has clearly learned from its history with Moto, it should be acknowledged that hardware is a tough business and is still outside of Goodles core competencies. Best of luck to them it’s a tough but to crack.

  12. Jeffery Commaroto

    Maybe the rest of HTC can figure out how to make iPhone components. Seems like a decent business model...

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