Google to pay $1.1 billion for the division at Taiwan’s HTC Corp that creates the U.S. firm’s Pixel smartphones – its second major foray into phone hardware after an earlier costly failure.
The all-cash deal will see Google gain 2,000 HTC employees and also acquire a non-exclusive license for HTC’s intellectual property. While Google is not acquiring manufacturing assets, this transaction highlights higher ambitions for Android smartphones even when the consumer and media attention is deeply focused on competitor Apple Inc.
“Google has found it necessary to have its own hardware team to help bring innovations to Android devices, making them competitive versus the iPhone series,” said Mia Huang, analyst at a research firm.
This move comes ahead of new product launches during October that are anticipated to include two Pixel phones and a Chromebook. Launching a year ago. pixel smartphones have less than 1 percent market share with an estimated 2.8 million shipments.
Google focused on not repeating mistakes made from purchasing Motorola for $12.5 billion back in 2012 then not even two years later sold it to China’s Lenovo Group Ltd for less than $3 billion.
The Taiwanese firm at one time sold 10 smartphones globally but has seen market share fall sharply due to the competition from Apple and Samsung Electronics Co.
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Ryan Reith, analyst stated, “Unless Google really wants to control hardware for its other businesses like Home and Chromebooks in addition to smartphones, then I don’t see this as being a bet that pays off.”
According to IDC, HTC’s smartphone shares dropped to 0.9 percent last year from the peak of 8.8 percent from 2011 worldwide. HTC shares halted on Thursday. The stock fell around 94 percent from the peak in 2011, which gives the company a market value of around $1.9 billion.