Under a $1.1 billion collaboration agreement announced today, HTC employees who helped develop Google's Pixel smartphone will soon become official Googlers. In return, the struggling, Taiwan-based consumer electronics firm receives a financial shot in the arm to help it advance other technologies such as augmented reality, artificial intelligence, and the Internet of Things.
The agreement launches the next stage of his company's long-term hardware development ambitions, Google senior vice president of hardware Rick Osterloh said today in a blog post.
HTC and Google have worked together on numerous projects over the past decade, most recently on the "Made by Google" Pixel (pictured center) and Pixel XL smartphones released in October 2016. HTC is also Google's partner in the development of the Pixel 2, expected to arrive on the market on Oct. 4, although the Pixel 2 XL will be made by LG.
'Investing for the Long Run'
Along with the new Pixel 2 phones, other Made by Google devices are also expected to debut on Oct. 4. Among the products that might be unveiled are updated versions of the Google Home intelligent home speaker, the Daydream View virtual reality headset, Google Wifi, and the Chromecast Ultra digital media player.
"We're excited about the 2017 lineup, but even more inspired by what's in store over the next five, 10, even 20 years," Osterloh said. "Creating beautiful products that people rely on every single day is a journey, and we are investing for the long run." That's why Google has signed a new agreement with HTC: to "fuel even more product innovation in the years ahead," he said.
The deal will help Google "supercharge their hardware business while ensuring continued innovation within our HTC smartphone and VIVE virtual reality businesses," said Cher Wang, chairwoman and CEO of HTC, in a company statement.
HTC Eyes 'Streamlined' Portfolio
As several observers noted after today's announcement, the new agreement with HTC underscores Google's desire to threaten the world's top smartphone makers, including Samsung but especially Apple. It's similar to the reason Google acquired Motorola for $12.5 billion six years ago, ABI Research's David McQueen told The Guardian today.
"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)," McQueen said.
Google has since sold Motorola, but retained the company's patent portfolio. Under its new agreement with HTC, it gains not only the Pixel development team -- believed to number around 2,000 employees -- but a non-exclusive license to use HTC's intellectual property.
For HTC, the long-term benefits of the agreement are less certain. Beyond gaining a one-time injection of cash, the company said it plans to move forward with "a more streamlined product portfolio" in its smartphone division and continue development of its VIVE virtual reality ecosystem.
HTC's share of the global smartphone market has declined over the past several years, and its Q2 2017 financial results show a quarterly operating loss of NT$2.2 billion, or around $7.3 million in U.S. dollars.