Google is spending $1.1 billion to hire HTC's best smartphone talent

Google has made a strategic investment in HTC, and is hiring its best phone engineers.

After intense speculation and lots of pontificating by tech pundits, Google has made it official: it's going into business with HTC.

But instead of buying HTC's phone business outright, Google has "signed an agreement with HTC, a leader in consumer electronics, [to hire] a team of HTC talent [to] join Google as part of the hardware organization. These future fellow Googlers are amazing folks we've already been working with closely on the Pixel smartphone line, and we're excited to see what we can do together as one team. The deal also includes a non-exclusive license for HTC intellectual property."

The announcement, made by Rick Osterloh, who heads Google's nascent hardware division, notes that his company has been working closely with HTC since the early days of Android. Notable devices from those early days include the T-Mobile G1, the Nexus One, the Nexus 9, and the Pixel. HTC is expected to be manufacturing the Pixel 2 for Google this year, too.

It's still early days for Google's hardware business. We're focused on building our core capabilities, while creating a portfolio of products that offers people a unique yet delightful experience only made possible by bringing together the best of Google software—like the Google Assistant—with thoughtfully designed hardware. HTC has been a longtime partner and has created some of the most beautiful, high-end devices on the market. We can't wait to welcome members of the HTC team to join us on this journey.

The financial details are a bit more sedate — $1.1 billion in cash — than the $12.5 billion Google paid for Motorola back in 2012. It appears that HTC will continue to operate as an independent entity, both as a maker of VR hardware under its Vive division, and as a smartphone maker, too, though in what capacity remains to be seen. HTC CEO Cher Wang said in a press release that her company is preparing for its next flagship already, and that this positions the company well for the future.

The move gives Google "non-exclusive" access to many of HTC's most valuable intellectual property, allowing it to iterate on future smartphones, likely in the Pixel line, for years to come. It also paves the way for developing future Pixel phones within the company itself, ensuring even more control over the hardware and the Android software. It's also believed that Google is working on its own silicon for the Pixel line, with the aim of eventually pushing Qualcomm out as the SoC provider in its flagship phones.

This agreement also supports HTC's continued branded smartphone strategy, enabling a more streamlined product portfolio, greater operational efficiency and financial flexibility. HTC will continue to have best-in-class engineering talent, which is currently working on the next flagship phone.

For HTC, the $1.1 billion amounts to a bailout of sorts after its revenue continued to dive in its most recent quarter. As good as its HTC U11 flagship has been received by the media, it hasn't sold well, and HTC has been looking for months to divest itself of some of its excess in exchange for a much-needed cash injection. Google, which relies on HTC's design and manufacturing facilities to build its Pixel phone, was likely the best suitor, since few companies want to take on the maintenance-intensive manufacturing facilities that HTC has on its books.

The deal is expected to close in early 2018 after it clears regulatory hurdles in the U.S. and Taiwan.

What do you think of this announcement? Should Google have bought HTC outright, or does this deal work in its favor? Let us know in the comments below!