Alphabet Inc, parent company of search engine giant Google, has agreed to acquire part of HTC Corp.’s engineering and design teams for nearly $1.1 billion. This latest acquisition is expected to help the U.S. search giant in bolstering its nascent hardware business and to better compete with arch rival Apple.
As per the agreement, HTC’s engineering team that worked on last year’s launch Pixel Smartphone (a joint venture between Google & HTC) would also formally join Alphabet Inc. The deal also includes non-exclusive licensing agreement for HTC intellectual property, according to statements released by both companies.
With the migration of HTC’s engineering team, Google is expected to get a tighter control over manufacturing of Pixel smartphones. The search engine giant has been for long desperately vying to replicate the Android’s spectacular business for its hardware business, but till now hasn’t been able to achieve this tall feet.
It was this desperation that prompted Google to acquire mobile handset maker Motorola for whopping $12.5 billion in 2012. However, this acquisition turned out to be a bad business for the search giant, after it sold Motorola to Lenovo Group for less than $3 bn. Now many analysts have already started speculating whether Alphabet Inc has done similar mistake with HTC’s acquisition, though valuation of this acquisition is far less.
The deal marks HTC’s declining fortunes
It is still too early to predict how departure of engineering team will impact HTC’s business, but the move certainly reflects mobile handset maker’s ominous decline. Once considered as top smartphone manufacturer, HTC over the years lost sizeable market share due to onslaught from Samsung, Apple and plethora of Chinese competitors like Huawei, ZTE and Xiaomi.
With smartphone business in shambles, HTC since 2015 has been focusing on getting a strong foothold in virtual reality (VR) business with its Vive VR headset. But even the VR business seem to have fallen prey to growing losses, with HTC reportedly planning to selling Vive headset to other VR competitors.