Google Pixel 2 is launching on October 4, but ahead of that the company has made a big announcement. Google is acquiring HTC’s engineering and design team talents, including those who are already working on the Pixel smartphones. The price for this talent acquisition is $1.1 billion, which is substantial, though just small change for the search giant. HTC will also be signing a “non-exclusive license for its intellectual property” with Google. As with any big acquisition in the tech world, there are questions around what this means for both companies.
This is not the first time Google has ventured into the hardware side of smartphones. The company bought Motorola in 2011 for $12.5 billion, but sold it off in 2014 to Lenovo. While Motorola really didn’t flourish under Google, it did give the latter access to a whole bunch of patents, which it has held onto since then.
With the HTC deal things are different. For one, HTC smartphones will still continue to be manufactured and sold separately. Google is just getting the team that worked on the Pixel, and over a billion dollars for this alone is a fairly expensive proposition. Clearly for Google, the Pixel as a brand holds immense value.
At the launch of the original Pixel series in October 2016, Google’s executives had made it clear their new premium smartphone was nothing like the Nexus or other previous ‘stock’ Android phones seen in the past. Google’s idea with the Pixel is combining hardware and software and figuring out exactly what is needed in the components. The philosophy is to design the entire experience in-house for a better overall fit at the end.
Keeping Pixel in-house also gives Google the freedom to start working on the next version of its devices since they are the ones picking device components, etc. It is only the actual manufacturing process that is outsourced. That’s easily comparable to Apple, which controls everything in the iPhone from software down to the hardware, but outsources the actual manufacturing to players like Foxconn.
The search giant will be hoping the HTC deal boosts all of this synergy needed to make Pixel a big success and a worthy rival to the iPhone. So far the sales numbers for Pixel series have been muted, and in markets like India, it remains an expensive proposition.
Google views Pixel as their “end-to-end” product. Unlike Nexus phones, which were always designed in partnerships with players like HTC, LG, etc the Pixel is supposed to have only the Google stamp on it. These are also the first phones now to get the latest Android software update as we saw with the case of the Android O, just like Apple does with the iPhones. Of course, the Nexus series also got the updates, but those are now nearly two years old and no new ones are coming.
We have seen Google take a multi-pronged approach to Android and switching gears every couple of years. There’s the Android One program, which the company has revived in India with Xiaomi Mi A1. Now there’s a US-only Moto X4 which is an Android One device that works on the company’s Project Fi. But in these phones, Google has no control over hardware. The real value lies with the Pixel series, which has a price tag that wants to challenge the iPhone.
Google’s senior vice-president for hardware Rick Osterloh says in a blogpost on the HTC deal that when it comes to hardware they wish to remain in this for a long time, “even 20 years.” Now we’ll have to wait and ‘Google-branded’ Pixel 2 smartphone sees a lot more success to prove the worth of this HTC deal.