News broke Wednesday morning that HTC had suspended trading ahead of a major business announcement, and now we're learning the details of this blockbuster move. While Google is definitely the other party in this new venture, it's not exactly the arrangement that was rumored earlier this month.
Google announced that it will give HTC a $1.1 billion cash infusion in exchange for some key members of the company's smartphone team. According to Google, many of these HTC employees have already gotten a taste of the “Googler” life as they have been involved in the development of its flagship Pixel family of smartphones. If you recall, HTC manufactured both the Pixel and Pixel XL smartphones that debuted last year, and is reportedly manufacturing this year's Pixel 2. In addition, Google is set to receive a non-exclusive license to use HTC's intellectual property.
Earlier reports had suggested that Google was interested in purchasing HTC's entire smartphone division, but this is definitely a pared back version of that plan. Google is also probably a bit soured on the idea of going "all in" with such a purchase, like it did with its $12.5 billion Motorola Mobility acquisition. Google quickly bailed on that marriage, sending Motorola on over to Lenovo, while losing a huge amount of money on the deal.
The $1.1 billion windfall is a definite plus for HTC, as it will continue to develop its own smartphones and pursue efforts in the virtual reality space with its Vive lineup. However, it remains to be seen how the loss of key smartphone talent to Google will affect its future product lineup. For its part, HTC doesn't seem to be too concerned … for now.
"HTC will continue to have best-in-class engineering talent, which is currently working on the next flagship phone, following the successful launch of the HTC U11 earlier this year," said HTC in a press release. "HTC will also continue to build the virtual reality ecosystem to grow its VIVE business, while investing in other next- generation technologies, including the Internet of Things, augmented reality and artificial intelligence."
Google and HTC have a long history, dating back to the HTC Dream (aka T-Mobile G1), which was the first commercially available Android smartphone. The two also partnered for the Nexus One, which launched in 2010, along with the aforementioned Pixel from 2016.
"In many ways, this agreement is a testament to the decade-long history of teamwork between HTC and Google," added Rick Osterloh, Google Senior Vice President, Hardware. "HTC has been a longtime partner and has created some of the most beautiful, high-end devices on the market. We can't wait to welcome members of the HTC team to join us on this journey."
We can't help but think that Google is getting the better end of the deal with this transaction, which will be completed sometime next year. HTC hasn't had a hit smartphone in quite some time (mostly due to Samsung's Android domination), and it has been losing money at a rapid clip. This truckload of cash from Google may help slow the bleeding for a while, but HTC is going to need some major surgery to mend its smartphones wounds.