Tech Giant Google is rumored to be in the “final stages of negotiations” to buy smartphone company HTC according to one Chinese news outlet. This could indicate a want on Google’s end to either expand their VR capabilities or revamp their smartphone development.
The rumors all started when a Taiwanese newspaper Commercial Times suggested that Google only wanted the cell phone part of HTC. However, few details existed on the website other than speculation about what Google would want with HTC’s mobile wing. This isn’t the first sign that HTC was looking to sell.
HTC, initially one of the more popular smartphone makers in the United States, has fallen off of most carrier store shelves after several consecutive unsuccessful smartphone launches. It recently launched a separate division that sells virtual reality headsets.
The Taiwanese company builds the Google Pixel, which means it could be a good fit for Google as it continues to cater to consumers with its “Pixel” smartphone brand. Google purchased Motorola Mobility in May 2012 for $12.5 billion. They resold various divisions of Motorola Mobility for roughly $3 billion each. Google also retained Motorola’s patent portfolio — the real prize in acquiring the company — for just $3.5 billion. Why repeat such move again?
Commercial Times also hinted that Google might acquire HTC for its VR play rather than smartphone building capabilities, even if Google bought the entirety of HTC. The news outlet said that Google had an urge to “perfect [the] integration of software, content, hardware, network, cloud, [and] AI,” thus making HTC the smart purchase for Google.
Eric J. Sheridan a UBS Analyst illustrated in a note on Thursday why Google might want to push further into hardware:
From a strategic standpoint, owning & operating its own mobile operating division would offset some of the key strategic challenges that Google’s mobile computing business might face: a) a deeper integration of hardware/software would offset some of the Android fragmentation issues that do not plague Apple iOS; b) development cycles that maximize forward mobile computing trends (Google Lens, location, ARCore, Google Assistant) with possible greater user adoption; c) an offset to rising Distribution TAC expenses; & d) an offset to any negative industry dynamics (unbundling of apps) resulting from the European Commission’s Android investigation.
Sheridan decribed Google’s acquisition of HTC as “immaterial to ABC” given th $95billion cas stash.