The deal struck between Google and HTC gives both companies what they need to achieve their immediate and long-term goals, but the effects of the Pixel team joining the Mountain View-based company actually go beyond just them. HTC receives $1.1 billion for letting Google take key employees; however, many more are involved.
Let’s see who all of the winners and losers are from the Google-HTC deal announced this week.
In 2018, you’ll hold a true Google phone.
Expect 2017 to be the final year Google is forced to ask a hardware manufacturer to be a partner on anything. Why? Help is no longer necessary as the entire Pixel team is now employed by Google. Everything from product development to production can be done in-house once the deal closes. The Pixel team, which made the 2016 phones and will launch at least one 2017 model, should remain based in Taiwan and different parts of Asia to stay close to manufacturing. So, moving forward, all Google-branded hardware will be 100% Google’s creation.
We’ve seen this shift taking place for quite a bit. Google began releasing its own hardware a few years ago starting with the Chromecast in 2013. The Pixel C, Chromebook Pixel, and Google Home are among the devices that have also carried only Google’s name. Adding a dedicated hardware-focused team allows Google to completely break away from the potential chains a partner places on ambitious ideas.
Google’s latest acquisition shows no worrying similarities to the purchase of Motorola in 2011. The goal back then was to revitalize a well-known brand and load up on patents. Selling Motorola to Lenovo for much less than it paid wasn’t harmful as Google got to keep some patents and watch a longtime Android partner stay alive.
With HTC, Google is buying exactly what’s needed to bet big on hardware.
The battle between two of the world’s biggest technology companies is just getting underway. Neither Apple nor its loyalists will admit it, but Google buying the Pixel team from HTC poses a huge threat. Millions of people have been waiting years for Google to go solo in hardware. It’s becoming a reality, and Apple can’t deny Google has the best chance to give the iPhone a run for its money.
Consumers haven’t been in love with HTC for a couple years. The One M8 was praised for its one-of-a-kind design, but the One M9 damaged the brand when it experienced serious overheating. HTC couldn’t recover with the pricey 10 and the uninspired U11. Time went by and the company never adapted to keep up.
Getting $1.1 billion is nice, but it probably doesn’t mean much if you’re struggling to remain relevant. HTC is in a really bad financial position. In August the company generated below $100 million in revenue for the month, it’s lowest in over a decade. An injection of cash can only go so far, and HTC doesn’t plan to turn things around with a radical new strategy. All we know is that its portfolio will be streamlined while more money is invested in Vive and connected devices.
HTC needs to understand its mobile division can’t compete anymore. Samsung and LG are outspending on marketing, and Motorola gets big checks from carriers like Verizon to stay relevant. Even the unlocked, off-contract field is too overcrowded to resort to.
It’s only a matter of time before HTC recognizes the mobile industry doesn’t have room available. The money Google is giving the company should be spent entirely on Vive and connected devices. Not another penny deserves to go toward the development of a new phone.
HTC wins because it’s getting much-need cash but it’s losing because it refuses to stop making mobile devices.
Competition benefits consumers more than anyone else. It pushes companies to innovate, and innovation gives birth to groundbreaking features. iOS and Android wound’t be used on billions of devices if Apple and Google weren’t racing to one-up the other. Same goes for hardware. Look at the way flagships are designed. Samsung made edge-to-edge displays mainstream. Now there’s the iPhone X shipping later this year with an edge-to-edge display. It’s no coincidence that the most popular features from one platform or device are brought over to a competitor’s products.
Google will make its own stuff, but it’ll also pay close attention to what the market does. If consumers flock to one idea, Google would be inclined to adopt it. The same goes for anything Google implements that benefits the overall experience for a user.
Loser: Android’s partners
If you’re a company making Android devices, you feel betrayed. Google is getting into hardware, which almost conflicts with everything the ecosystem stands for. It’ll be an Apple-like luxury for Google to tailor hardware for software and software for hardware. Everyone else working with Android has to play by Google’s rules of what can and can’t be done. Android is and always will be customizable, but partners can’t beat the appeal of a Google-made phone.
Top-tier brands have nothing to worry about. Samsung proved its resilience by surviving a frightening scandal in which phones had exploding batteries, and LG will continue building high expectations but falling short every time. Motorola, meanwhile, will do whatever the carriers want. And Huawei can continue focusing on every region except North America. It’s the second-tier brands, like OnePlus and Sony, who have to be terrified of what’s coming.
The attack on its partners may not be immediate, though, and that’s a good thing. It’ll take more than a year for Google to develop a customer processor similar to Apple’s A-series of chips. We’ll likely see a phone in 2018 similar to the 2016 and 2017 phones. As it brings in outside components, Google will develop its own technologies. We’re about two years away from seeing a Google-made phone with custom components.
What do you think of Google investing heavily in hardware? Let us know what effects you think it’ll have on the mobile industry.