Connect with us

Hi, what are you looking for?


What does Google want with HTC’s smartphone business?

Google has announced it’s acquiring a $1.1bn chunk of HTC’s smartphone business, and with it providing the once leading Taiwanese phone brand a much needed lifeline. But what does Google want with part of a smartphone business?

Google isn’t buying the whole of HTC, just a relatively large part of the Taipei-based company’s smartphone business and not its Vive virtual reality headset business. Google gains half of HTC’s research and development team – about 2,000 people – and a non-exclusive license for HTC’s intellectual property, allowing it to take advantage of some of HTC’s advances in smartphone technology.

HTC gets a cash injection, which will help it survive in some very competitive markets, and Google gets to continue its “big bet on hardware” according to Rick Osterloh, the company’s senior vice president for hardware.

It’s “a business decision to have access to one of the best R&D teams”, said Neil Shah, research director at Counterpoint Technology Market Research. But it’s also “a sort of emotional decision to save its close partners”.

Little history of hardware

While Google is the creator of the Android operating system, which is now used on more than 2bn devices a month, or 89% of mobile devices according to IDC, it has only dabbled with making its own smartphones and tablets. It routinely partnered with firms such as HTC, LG and Huawei to make the Nexus series of a devices, which sold in low volumes and acted as showcases for each new version of Android.

Google bought Motorola in 2011 for $12.5bn (£9.24bn), and while it ran it as a separate company selling smartphones aimed at the low end, the acquisition was really about a large stock of important patents.

“Its main reasoning was to acquire Moto’s patent portfolio so as to protect against Apple (and Microsoft) while also providing stiffer competition to Samsung (although Google would never admit this),” said David McQueen, research director at ABI Research.

Google sold Motorola to China’s Lenovo in 2014 for $2.9bn without the collection of patents.

Advertisement. Scroll to continue reading.
Google Pixel smartphone.
 Google’s Pixel smartphone, made by HTC. Photograph: Samuel Gibbs for the Guardian

It wasn’t until 2013 that Google’s first true own-brand hardware arrived in the form of the Google Chromebook Pixel – a £1,000 laptop designed and made as much as a developer showcase and for use internally at Google as a viable product to sell to the public. Google also launched its Chromecast streaming stick in 2013, which has since become its biggest hardware success with more than 30m units sold since launch.

Google followed up with a revised Chromebook Pixel in 2015, but it wasn’t until 2016 that the company made its own Pixel Android smartphone. The Pixel and Pixel XL were premium smartphones aimed directly at Apple’s iPhone and were manufactured by HTC for Google, with no branding or mention of HTC on the product or packaging.

The Pixel smartphones represented a new stage in Google’s ambition to do battle with its rival Apple directly, rather than continue conducting a proxy war using Android and various third-party manufacturers such as Samsung.

What Google has done with its HTC deal is buy the expertise that made last year’s Pixel smartphones, bringing the team responsible in-house.

Thomas Husson, Vice President and principal analyst for Forrester, said: “Two weeks ahead of the likely announcement of new Pixel smartphones and other emerging hardware devices, HTC’s acquisition illustrates Google’s commitment to the consumer device space. Official release of new products on 4 October is likely to demonstrate that Google is finally serious in developing a more tightly-controlled device ecosystem.”

Eyeballs on screens (and ads)

As the percentage of smartphone owners in developed nations nears saturation point and the differences between device hardware have diminished, the smartphone game has rapidly become much more focused around the services the phone can deliver rather than the device itself.

For Google, this means its plethora of web services. From Gmail to Google Play to the latest entrant in the series, Google Assistant, it’s all about keeping people within the Google ecosystem. The more time people spend with Google products, the more information the company can glean and the more potential contact points it has to sell advertising.

Google created Android as needed its search and services front and centre in the new smartphone world.
 Google created Android as needed its search and services front and centre in the new smartphone world. Photograph: Kim Kulish/Corbis via Getty Images

That was the reason Android was developed in the first place, as Google saw mobile as the next evolution of computing and needed its search and services front and centre in the new smartphone world. It’s also the reason Google pays Apple $3bn a year to remain the default search provider on the iPhone.

But as services have become more and more important, third-party Android manufacturers, including the biggest smartphone player of them all, Samsung, have started to develop their own services. Samsung’s Bixby is a clear shot across the bow of Google Assistant, for instance, while HTC and others started integrating Amazon’s Alexa.

The European Union is also currently investigating Google’s marshalling of Android for anticompetitive practices, which might force the company to stop pre-loading Google search on third-party Android devices, among other things.

Faced with the potential for a changing landscape where Android is no longer as effective a delivery system for Google services, the decision to produce its own hardware starts to make sense.

Advertisement. Scroll to continue reading.

Pure, undiluted Google

Osterloh said: “Our team’s goal is to offer the best Google experience — across hardware, software and services — to people around the world.”

With the Pixel smartphone line, Google has the opportunity to drive home a device that is all Google, no longer diluted by other’s services and produce a device line that could weather the storm of EU intervention within Android ecosystem. As Apple has proved time and time again with the iPhone, when you fully control both hardware and software on a device, you can do things with the wider services-and-devices ecosystem others would struggle with.

McQueen said: “What is in Google’s favour this time is that it is buying just a part of HTC, and it is a part that can help it deliver smartphones with a premium, elegant industrial design while also providing much tighter integration between hardware, the Android OS and Google’s services.”

samsung salesmen
 Samsung dominates with a global smartphone marketshare of 21% in 2016 with 311m units shipped. Google sold around 2m Pixel smartphones in 2016 and HTC sold just 13.9m with a marketshare of 0.9%.
Despite being the maker of Android, there’s no doubt Google faces a massive uphill battle in the smartphone market. Samsung dominates with a global smartphone marketshare of 21% in 2016 with 311m units shipped, according to data from IDC. Apple is a close second with 15% and 215m units, while China’s Huawei is the third-largest smartphone manufacturer and rising, with a marketshare of 9% and 139m units. For perspective, Google sold around 2m Pixel smartphones in 2016 and HTC sold just 13.9m with a marketshare of 0.9%.

“Although shipments in the Pixel range are currently less than 2m a year, this tie-up will undoubtedly be a good thing for Google. It will help it grow scale in the high-end while turning it into a major competitive threat to the other Android original equipment manufacturers rather than just as a point of reference,” said McQueen.

Hardware to deliver voice

The next evolution of smart technology is arguably artificially intelligent voice assistants. This “ambient computing” revolution promises access to information anywhere, at any time by means other than a device – think Star Trek: the Next Generation’s ever-present computer.

The smartphone was the first wave of access to information anywhere, any time, and will likely be a ready conduit for the foreseeable future. Most smartphones already come with some form of voice assistant, from Siri and Google Assistant to Cortana and Alexa.

For Google this next stage of computing is incredibly important. Google Assistant is its latest foray, connecting various related features from search and voice commands to Google’s massive internal encyclopaedia and delivering it not only through a smartphone but also smart speakers, computers and even cars.

For Google to compete fully with the likes of Amazon in this new voice-enabled arena, it needs hardware efforts. The Google Home smart speaker was a crucial first step and it is expected to be joined by a smaller Google Home speaker on 4 October.

Geoff Blaber, vice president of research, Americas, for CCS Insight said: “As computing, AI and search become pervasive, Google needs to ensure that it can deliver its services as seamlessly and broadly as possible. That requires deeper involvement in hardware”

Whether it’s a speaker, a smartphone or a computer, in an increasingly competitive landscape, Google needs much better integration between hardware and software if its services are to continue to thrive.

Advertisement. Scroll to continue reading.


You May Also Like


Professing to be the lead in Thai relationship with over 1.5 million enrolled single people, Cupid Media’s ThaiCupid brings the one in every of...


An exclusive article form Orestis Karipis In the 1930’s and 1940’s acid was the weapon of deceived husbands and wives in the Western world...


Read more about switzerland women here. Swiss ladies and men are not reknown for being the most chatty, outgoing or spontaneous when meeting strangers...


In food, if there is one thing you can say without fear of contradiction, it is this: Britain loves burgers. The UK market is...

Copyright © 2020 All Rights Reserved