INTERNATIONAL - Google is biting off a big piece of device manufacturer HTC for $1.1billion (R14.6bn) to expand its efforts to build phones, speakers and other gadgets equipped with its arsenal of digital services.
It’s buying the HTC engineering team that built the Pixel smartphone for Google in a cash deal, the companies said in a joint statement yesterday. Google is also getting a non-exclusive licence for Taiwan-based HTC’s intellectual property to help support Pixel phones.
The deal underscores how serious Google is becoming about designing its own family of devices to compete against Apple and Amazon in a high-stakes battle to become the technological hub of people’s lives.
The deal, which needs regulatory approval, is expected to close early next year. Over the past decade, Google had focused on giving away its Android operating system to an array of device makers, including HTC, to ensure people would keep using its ubiquitous search engine, e-mail, maps, YouTube video service and other software on smartphones and other pieces of hardware.
But that changed last year when Google stamped its brand on a smartphone and internet-connected speaker. HTC manufactured the Pixel phones that Google designed last year, paving the way for this deal to unfold.
HTC’s chief financial officer Peter Shen said about 2000 engineers will be transferred to Google. The staff are “primarily focused on research and development.”Although Android powers about four out of every five smartphones and other mobile devices in the world, the software can be altered in ways that result in Google’s services being de-emphasised or left out completely from the pre-installed set of apps.
That fragmentation threatens to undercut Google’s ability to increase the ad sales that bring in most of the revenue to its corporate parent, Alphabet Inc, as people spend more and more time on smartphones and other devices instead of personal computers.
Apple’s iPhone and other hardware products are also particularly popular among affluent consumers prized by advertisers, giving Google another incentive to develop its own high-priced phone as a mobile platform for its products and ads.
Google also wants to build more internet-connected devices designed primarily for home usage, such as its voice-controlled speaker that’s trying to catch up with Amazon’s Echo. The home speaker includes a digital concierge, called Google Assistant, that answers questions and helps manage people’s lives, much like the Alexa in Amazon’s Echo.
The latest purchase is a big gamble for Google Inc and parent company Alphabet Inc but analysts say this time it could pay off. That’s because it gives a financial lifeline to Google’s struggling Taiwanese partner, while giving the Silicon Valley giant access to the strong R&D talent it needs to expand its share in the coveted premium smartphone market.