Rumors have recently started to circulate that HTC is selling its mobile division to Google and that it is, in fact, already in the final stages of the deal. Whether or not any such transaction is actually in the making remains to be seen, as both companies have stayed quiet about those rumors, but a deal like that could feasibly happen and the prospect has left many wondering how either company would benefit from it and what other implications of such a turn of events would be. This would not be the first time Google has bought the mobile division of a prominent — or once-prominent — manufacturer and its last effort with Motorola didn’t necessarily work to its benefit. However, there are actually several things about the idea of Google acquiring HTC’s mobile division that make a lot of sense for the two organizations in terms of long-term goals of both. Succinctly put, HTC’s mobile aspirations are simply not panning out any longer and Google could gain a new inroad into the global mobile market by taking over its business.
Rather than losing out as a result of creating inferior devices, HTC’s decline is ongoing despite the fact that the company still makes some of the best Android phones on the market. The HTC U11, for example, has been lauded by critics and is largely an exceptional example of the kinds of performance users have come to expect from a modern Android flagship. Unfortunately, it hasn’t led to an improvement in HTC’s sales numbers or finances in any meaningful way and similar scenarios have presented themselves to the company for numerous consecutive years now. One major reason for that failing could be marketing; the company has not been able to present itself to consumers in an appealing light and, realistically, doesn’t have the staying power of many of its rivals when it comes to the financial capability to really push its devices on a global scale. Another aspect to that is that its lack of financial might makes it unable to compete with its larger rivals for suppliers and manufacturing resources. Furthermore, because HTC focuses primarily on designing the hardware and software for its electronics, it doesn’t have many secondary sources of income. Namely, it doesn’t manufacture its own chipsets or other components and doesn’t have many secondary electronics it sells on a global scale.
Beyond that, HTC’s mid-range and budget devices have not been as consistently great as its flagships and have failed to gain the acclaim of rival devices in those tiers. With that said, the primary benefit to HTC in any deal to sell its mobile division will come in the form of relief from projects that drain heavily on its finances. In other areas of the electronics and technology industry, the company is fairing much better, which includes its Vive VR division. Although the two units of HTC are technically separate, there is an argument to be made that the company’s mobile business has been or could be preventing more investments on that front.
As to Google, the firm behind the hugely successful Android OS has not necessarily seen the best return on all of its past investments either. Android currently leads as the world’s most used mobile operating system but Google has not broken into the hardware side of the mobile market, despite its 2012 purchase of Motorola Mobility. In fairness, Google was not, at that time, fully committed to the hardware side of the mobile market. However, that apparent test foray cost the company just under $10 billion since the eventual sale of Motorola only brought the company around $2.9 billion in return, though it did get to keep many of the firm’s patents. Bearing that in mind, the company has been taking a much more direct approach to the physical end of the market in recent years. Most notably, Google unofficially dropped the Nexus lineup in favor of Google-branded Pixel smartphones. Both ranges technically serve a similar purpose — to set a standard for OEMs to strive for — but the latter devices are no longer marketed as having been made by the company’s that actually manufactured them. In the case of the first-generation Pixel devices, both were made by HTC, which seems to show that Google is ready to take further control over its ecosystem and plunge headfirst into realizing its own visions of what Android hardware should be.
The main benefit to Google from acquiring HTC would be that the company would ultimately gain a hardware division of its own that is already fully capable of creating flagship-level hardware, including supply chains and connections that go hand-in-hand with HTC’s mobile division, as well as any other related properties or assets. Moreover, it would be able to exert even more control over the hardware itself, rather than just providing guidelines, as with the now-discontinued Nexus line, or a general design along with specifications, as with the Pixel devices. Additionally, unlike HTC, Google would also be far less constrained by financial circumstances and other HTC-specific issues mentioned above, consequently being able to commit more resources to marketing and reaching a significantly larger audience.
In the long-term context, a first-party device from Google could ultimately further the prospects for Android itself if the product is well-received since it would represent precisely what Android is actually meant to be to the same degree as its biggest current competitor — iOS — essentially giving Google its own Android equivalent to the iPhone. Meanwhile, HTC would be effectively unburdened by its floundering mobile division and ultimately freed up to focus on its more profitable virtual reality ventures, not counting the possibly huge influx of expendable revenue to be gained by the sale itself. Ultimately, while a deal between the two companies would almost certainly be hugely beneficial to both, it remains to be seen whether recent rumors end up amounting to anything.