Google/HTC deal is official, Google to acquire part of HTC’s smartphone team

The Google and HTC deal is official, it’s just not quite what we were expecting. Google isn’t buying HTC outright, à la Motorola; instead, Google and HTC have signed an agreement to send some of HTC’s employees over to Google, while HTC gets a $1.1 billion cash infusion. The deal also includes a non-exclusive license for HTC’s intellectual property.

While earlier rumors pointed to an outright acquisition of HTC by Google, with this deal HTC remains an independent company, and will still manufacture smartphones. Google is acquiring some of HTC’s employees but not any of the Taiwan company’s factories. Manufacturing facilities are more of a liability today in the smartphone business than anything, with even Apple, the king of vertical integration, outsourcing that work to companies like Foxconn.

On Google’s side, the deal was announced by SVP of Hardware and former Motorola CEO Rick Osterloh. In a blog post, Osterloh said, “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.”

It sounds like Google just bought HTC’s Pixel team, and hopefully this will allow the company to create smartphones that are more differentiated from the competition. Today, the Google-branded Pixel phones have “secret” manufacturers that heavily influence the design of the phone. The 2016 Pixel and Pixel XL were manufactured by HTC, while the 2017 Pixels (launching October 4th) are split between two manufacturers, with the smaller version made by HTC and the larger version made by LG. We also know from FCC filings and device teardowns that Google doesn’t do as much of the engineering work on the Pixel as it would like you to believe.

A beefier hardware team should also help Google bring much more of the design in-house. It should also help it realize some of its bigger smartphone hardware ambitions, which include things like making its own SoCs and building machine learning co-processors, called “Tensor Processing Units,” into phones.

HTC gets a $1.1 billion cash infusion, which it will use to continue competing in the smartphone and VR markets. In a press release, the company says the sale of the Pixel team will give it “a more streamlined product portfolio, greater operational efficiency and financial flexibility.” HTC swears it will still be around in the future, saying it “will continue to have best-in-class engineering talent, which is currently working on the next flagship phone.”

While Google’s cash is a good bandage for HTC, this isn’t a solution to the company’s plummeting sales, so we’ll still have to keep HTC’s seat warm in our annual Deathwatch article.

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