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.