Why Google Is Pushing Deeper into Hardware
Google penned a deal with HTC to own HTC resources
Alphabet’s (GOOG) Google has signed a deal with struggling with Taiwanese company HTC wherein a group of HTC’s phone design and engineering employees will join Google. HTC will get $1.1 billion in cash, and Google will receive a license for the smartphone maker’s intellectual property. However, the license is non-exclusive, which means that HTC will keep its branding.
HTC has helped make Google handsets before. Google launched its flagship smartphone “Pixel” in 2016 to compete with Apple’s (AAPL) iPhone, and the company has made big strides into its hardware segment over the last year or so. HTC was the contract manufacturer of Google’s Pixel. Google did not disclose its Pixel sales numbers.
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HTC’s smartphone market share has been plummeting
Many felt that Google’s Pixel camera was even better than the iPhone’s. But Google found it difficult to keep up with the demand—a problem that the company could deal with in the long term by scaling up production.
Back in 2011, HTC had as much as 10.7% of the smartphone market share, according to Statista, but the smartphone industry is a very dynamic one. Handset makers have to keep innovating to maintain their market shares, and now, HTC has a very small portion of the smartphone pie.
Notably, HTC’s revenues fell 36% in 2016.