Following recent reports of an impending deal with Google to save HTC’s struggling business, news broke late Wednesday evening that the companies reached an agreement resulting in a $1.1 billion cash infusion for HTC.
Update (9/21/17): Google’s $1.1 billion will buy the company a chunk of HTC’s phone engineering talent, including a portion of the team that had already been working on the hardware behind Google’s line of Pixel smartphones. The deal grants Google a non-exclusive license for unspecified HTC intellectual property.
For HTC’s part, the company is clear that it will use the cash infusion to continue its branded smartphone business as well as its Vive VR initiatives. In addition to VR, the press release announcement specifically says that the company is “investing in other next-generation technologies,” including augmented reality, a sector where we haven’t seen much play yet from HTC.
The announcement is certainly an interesting milestone for HTC, and a curious turn of events for the company who created the first Android phone with Google, the HTC Dream (AKA T-Mobile G1), back in 2008.
Original Article (9/20/17): According to the Taiwan Stock Exchange, HTC will halt trading of its stock as of September 21st, pending an unknown announcement from the company, reports Bloomberg. The move seems to lend weight to recent reports that the company is getting ready to sell off some or all of its business.
Following several years of financial difficulty, the future of HTC seems less clear than it’s ever been. While the company’s VR subsidiary, Vive, appears to be a recent bright spot, it represents a tiny fraction of the company’s overall business which is based primarily in the smartphone sector.
Bloomberg reported last month, citing unnamed sources, that HTC was “explor[ing] strategic options,” ranging from separating its VR business to a full sale of the company. Google—which is increasingly expanding its hardware business in the smartphone, connected home, and AR/VR sectors—has been fingered as one of the likely buyers.
Today Bloomberg reports that a deal between HTC and Google is drawing near, and that HTC will suspend stock trading on the Taiwan Stock Exchange as of September 21st, pending a forthcoming announcement from the company. Bloomberg’s Mark Bergen & Alex Sherman explain why Google might be interested in picking up some or all of HTC’s business:
By owning a manufacturer outright, Google could gain tighter control over production of its new Pixel smartphone and other devices, helping it ramp up sales. Those gadgets are fast becoming the pillars of Google’s strategic push to keep critical software products, such as its voice-enabled assistant, in circulation, contain costs in its main advertising business and better compete with Apple Inc.
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Alphabet investors may be concerned about history repeating itself. Google has tried to buy its way into hardware twice before, albeit more expensively. Those efforts largely fell short and the associated expenses slimmed Google’s margins. But its third try comes at a very different time — when Google and its biggest rivals are more focused than ever on consumer devices built around artificial-intelligence services.
Greater control over hardware production would give Google more power over the distribution of those new services, like its voice-based digital assistant. That would fix a major obstacle its Android software has faced compared with Apple’s iPhones, and a more robust hardware division would solve a nagging problem in its internet advertising business.
What that means for Vive, HTC’s VR subsidiary, is unclear. While Google has in some ways embraced the Vive VR headset by developing a number of applications for it, a high-end PC peripheral (which is presently quite reliant on Microsoft’s Windows OS) would be uncharted territory for a company which is historically focused on web and mobile.
Where Vive ends up after the (purported) dust settles could bring disruptions to the rollout of the forthcoming Vive standalone headset, announced earlier this year, that’s to be based on Google’s Daydream platform in the West, and on the Viveport platform in China.
