Google gets another feather added to its hat. This time it has decided to acquire the division at Taiwan’s HTC Corp that develops the U.S. firm’s Pixel smartphones, with $1.1 billion, regarding this measure to be its latest push into hardware manufacturing.
Google has already started preparations to boost up its hardware capability with deals and launches and have even hired Rick Osterloh, a former Motorola executive, to run its hardware unit.
To this, the Search Giant regarded that, “For Google, this agreement further reinforces its commitment to smartphones and overall investment in its emerging hardware business”.
The deal states of Google receiving a non-exclusive license for HTC’s intellectual property. But the Taiwanese firm will continue to run its remaining smartphone business.
This deal is important, owing to the fact that, HTC is a long time partner of Google and reports the state of Pixel smartphones accounting for almost 20 percent of HTC’s smartphone shipments.
But even after this, some analysts are questioning the wisdom of this deal, as HTC which once sold one in 10 smartphones globally, has seen its market share dwindle, facing tough competition from Apple, Samsung Electronics, and Chinese rivals.
However, leaving that part, for Google, this is the second major attempt in the genre of smartphone manufacturing. Previously, it has purchased Motorola Mobility for $12.5 billion in 2012 and sold it off to China’s Lenovo Group Ltd for less than $3 billion two years later.
Commenting on this, Osterloh regarded in a blog post that it is still the primary days for Google’s hardware business, further adding that it is mainly focused on bringing together the best of Google software and hardware for a suite of its core products.
As per IDC, Google has its strategy of licensing Android for free and profiting from various embedded services such as maps, leading Android to become the dominant mobile operating system, acquiring about 89% of the global market.
But even this has been disturbed by the presence of several variations of Android and the inconsistent experience that has produced. So, now pushing its own hardware, apparently will complicate its relationship with Android and the inconsistent experience that has produced.
Now, coming to HTC, the stocks have greatly suffered huge downfalls in the recent past. This year, till now it has experienced 12 percent fall and right now the company is estimated to a valuation of $1.9 billion.
The past reports state of HTC’s worldwide market shares declining to 0.9 percent last year from a peak of 8.8 percent in 2011, according to IDC.
Also with this, IDC estimated that Google’s Pixel had less than 1 percent market share since it was launched a year ago, with an expected 2.8 million shipments.
The transaction witnessed Evercore serving as financial advisor to HTC and Lazard doing the same to Google, is subjected to regulatory approvals and is expected to close by early 2018.