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HTC and Google sign a US$1.1 billion deal

Google bets more on hardware with the purchase of HTC's Pixel smartphone team and related patents
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Google and HTC sign a deal today.

Google Inc has signed a US$1.1 billion with Taiwan-based HTC to acquire its Pixel smartphone team and related patents, the search giant’s latest attempt targeting smart hardware business.

It also represented HTC’s business transformation from smartphone only to diversified business, including smartphone and virtual reality. HTC, which used to be the world’s No.2 smartphone vendor, lost market shares to Samsung, Apple and Chinese vendors in the recent years.

HTC employees, many of whom are already working with Google to develop Pixel smartphones, will join Google. HTC will receive US$1.1 billion in cash from Google as part of the transaction. Separately, Google will receive a non-exclusive license for HTC intellectual property (IP), according to a HTC statement.

“Google can use HTC's IP to better design and produce its Pixel phones. This means that Google will be more aggressive with pushing its Pixel phones as it strives to push more shipments globally,” Tay Xiaohan, IDC’s research manager, told Shanghai Daliy.

Before that, Google has acquired Motorola and smaller device firms to improve mobile and patent portfolio, when facing challenges like Apple with new iPhone X.

Google has to control handset manufacture because smartphone becomes “essential device” on future technologies like AI, smart home and self-driving, according to researcher TrendForce. 

On HTC, it hasn’t give up smartphone business. 

HTC is currently working on the next flagship phone now, besides building a VR or virtual reality ecosystem to grow its VIVE business, the statement said.

But HTC has less than 1 percent market shares in the global smartphone market now, compared with about 20 percent in 2011. It also posted loss for nine consecutive quarters.

The Google’s deal helps HTC to get capital but it also cuts 70 percent of HTC’s smartphone research resources, which makes HTC impossible to regain shares in the competitive smartphone market, according to Taiwan-based TrendForce.

In 2018, HTC is expected to sell 1 million smartphones, a quarter of the expected sales this year. 

Shares of HTC, listed in Taiwan, are halted trading today. The deal still needs regulatory approval, which is expected to be finished next year.



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