Why Did Google Take Over HTC?

Amid continuous reports that a countdown began for Google's acquisition of HTC, on September 20 (local time), Rick Osterloh, senior vice president of the Hardware Business Division at Google, said on his blog that Google will pay US$1.1 billion for the acquisition of HTC.

On the previous day, HTC announced that the company would put the trade of its stocks on hold in the Taiwanese stock market, which meant that the announcement would have a big impact on its stock price. Therefore, a rumor about Google’s acquisition of HTC was considered a done deal.

HTC is already working closely with Google. Not only did HTC made Google's first Android phone but is still one of Google’s important partners. Why is Google interested in acquiring HTC in this situation? Why does the global search giant want to acquire a hardware company after failing to make its acquisition of smartphone manufacturer Motorola a success?

The most dominant analysis is that Google will have stronger control over production of devices such as the Pixel Smartphone.

Another question can be posed at this point. Then why did Google sell off Motorola? HTC and Motorola, of course, are slightly different. What Google eyed in Motorola was its vast portfolio of patents as well as its handset business.

Google’s strategic utilization of HTC is slightly different in that aspect. It can be said that Google focuses on HTC’s hardware business rather than its patents. On top of that, changing strategic situations have had an impact on Google’s moves.

HTC, once a smartphone market leader, has lost much of its influence recently. HTC is failing to have its presence felt, sandwiched between Samsung and Apple that are the two frontrunners and other Chinese companies such as Huawei and Oppo. This is why HTC has been continuously suffering from rumors about the sell-off of its smartphone business this year.

Earlier, Apple Daily drew much attention from people by reporting that Google is pushing forward with a plan to buy HTC's smartphone design business for US$330 million. According to the report, if Google takes over HTC, Google will retain HTC’s brand and absorb about 100 engineers.

Of course, there is some concern. Investors in Alphabet, Google's parent company are expressing their concern that Google may repeat its failure in the acquisition of Motorola.

However, "That was then, this is now." Bloomberg said about such concern. According to Bloomberg, Google’s rivals are placing immense importance on hardware products, artificial intelligence (AI), and augmented reality (AR) devices. In particular, Apple is promoting its AR strategy from iOS11. It is said that in order to cope with such a situation, it is a good strategy that Google can consider to directly acquire a hardware company such as HTC.

Another possibility is being raised that Google may be interested in HTC’s Vive VR business instead of its smartphone business. HTC ranks third in shares of the VR and AR device market after Samsung and Sony.

In any case, hardware terminals can serve as a hub for Google’s software and advertising business strategies. It is also meaningful in that Google’s takeover of HTC will boost its competitiveness in competition with rival Apple.