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RIP HTC – Google In “FINAL STAGES” of HTC Acquisition

After years of disappointment, it looks as if HTC is finally throwing in the towel with Google linked as a potential buyer

HTC is done. Word on the street suggests the company, after years of disappointment and failure, is now in the final process of selling its phone business to Google.

That’s right – Google is buying HTC. Just like it did many moons ago with Motorola, before fobbing it off to Lenovo.

HTC hasn’t had a very good time of late. The company, once a dominant force in the Android space, is now just a bit-part player, struggling to keep its head above water.

The company’s financials, for as long as I can remember, read like a Cormac McCarthy novel, and now it appears as if the firm’s owners/investors have had enough – they’re selling to Google.

The news is all over the web, but sources claim Google is only after HTC’s phone business, so HTC, as a corporate entity, will still exist after the buyout – it just won’t make phones anymore.

HTC has a pretty extensive OEM business and decent facilities, though it isn’t clear whether these will be snapped up as part of the deal. As is always the case with these things, nothing is 100% clear – and likely won’t be until we see an official release from one of the parties.

Why Would Google Buy HTC?

There are a few reasons why Google would want to acquire a failing phone brand, but the most obvious ones in my mind are as follows:

  • Expertise – Google, rather than spending millions on R&D developing its Pixel phones, can simply buy-in the skills and people required to do this. Expensive, yes. But Google isn’t short of money and this is a short term cost for a long term problem.
  • Samsung – Google and Samsung aren’t exactly pals. Samsung is very big and has made multiple threats about its desire to break away from Android. Owning HTC would allow Google to compete with Samsung in a more direct fashion, as it can speed losses around its larger, very profitable business; HTC and many other Android OEMs do not have this luxury.
  • Manufacturing – Acquiring HTC would give Google access to its own manufacturing facilities, on top of all of the company’s designers and engineers. This, along with its Moto patents, puts Google’s phone business in a pretty good place. Especially when you consider the trouble it had meeting demand for its Pixel phone.
  • Apple – having its own phone business, with patents and production facilities, will give Google more control over its phone business. Lots more control. And this will allow it to better compete with Apple in the long run.

The nature of Apple’s business model is the envy of almost all enterprises in the tech arena. The company doesn’t sell as many phones as Samsung or Huawei, but because of its model, it makes more profit from its phone business than the two biggest sellers combined.

This model is about control – every aspect of the iPhone and iOS is controlled by Apple. When you spend money in the iOS ecosystem, Apple always gets a taste. Strap on top of that hardware profits, with an average profit margin of 40% per unit, and you have yourself a license to print money.

This is clearly what Google has in mind for its Pixel line of phones. It wants to make them the iPhone of the Android space; it wants control of the hardware, the margins associated with it, and the revenues generated from Android itself.

And Google, like Apple, is in a unique position because it already controls the most popular operating system on the planet.

Samsung, while a bigger phone brand, has to use Android for now, and this puts it at a massive disadvantage to Google, as it would take years and years to build a platform like Android. And even if it could, just look at all the time and money Microsoft wasted trying to break into the space.

That’s my 2p on the subject, what do you reckon? Hit me up in the comments below.

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