Google swallows part of HTC’s phone business for $1.1 billion

Google swallows part of HTC’s phone business for $1.1 billion

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HTC has announced the partial sale of its smartphone business to Google for $1.1 billion. With this transaction, Google gets its hands on more than 2,000 engineers and designers of smartphones dedicated to HTC mobile phones. Among the employees, there are of course the teams who participated in the design of the first pixels. HTC employees were reportedly invited to a general meeting on Thursday, September 21, about a partial acquisition of the company by Google. The transaction also includes a non-exclusive license agreement for HTC’s intellectual property.

For the American giant, the interest is to reinforce its presence in the smartphone market by developing internally its own products and take a lead over Samsung and Apple.

For its part, HTC will continue to work on connected objects, artificial intelligence and especially its Vive virtual reality headset.

HTC was experiencing difficult times with an increasingly delicate financial situation, despite the success of its latest HTC U11. The manufacturer had seen in one year its revenues decrease by 54% and its market capitalization fall by 75% in 5 years. So we knew that the Taiwanese manufacturer was in very advanced discussions with Google for several weeks. The announcement of the takeover of a part of HTC by the American giant does not surprise anyone.

The rapprochement between HTC and Google is logical in view of the history between the two partners. The Taiwanese had been the first manufacturer to offer a smartphone equipped with the Android operating system in September 2008. The two companies then collaborated on several occasions, notably for the first Nexus or more recently for the Pixels. This year again, a version of the new Google Pixel was entrusted to the teams of HTC.

With this acquisition, Google is strengthening its hardware division and clearly shows its ambitions in the manufacture of smartphones. “This is still Google’s first step in hardware,” said Rick Osterloh in a post published on the company’s blog. The US giant will thus be able to better optimize the software and hardware parts of its products in order to completely compete with the Apple iPhone.

This acquisition of a smartphone manufacturer is not a first for Google. As a reminder, the firm had acquired the manufacturer of Motorola smartphones for 12 billion in 2011 before reselling it three years later to Lenovo for only 3 billion. However, it would appear that this acquisition was primarily a patent issue.

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Zac Berry is presently a full time editor at Market Morning. He covers the M&As and follows live market commentary. Before joining Markets Morning, Zac Berry worked with a start-up, where he worked in the capacity of a Team Leader tracking company events and results. Born in the U.A.E, he spent most of his growing up years in Dubai. Currently, he resides in U.S. and is pursuing his charter in Accountancy.

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