Picking up HTC might make sense for Google; here is why
HTC is up for sale, and the software giant Google might be interested in acquiring the ailing smartphone company. According to Taiwanese publication Commercial Times, HTC is looking to sell its smartphone business and a final decision could be made before the year ends. The report said HTC is in the “final stage of negotiation” with Google over a strategic sale or potential takeover. However, HTC is not interested in offloading its Vive VR business just yet.
This isn’t the first time we are hearing of HTC looking out for suitable buyers. Last month, a Bloomberg report said HTC has been scouting options to exit the smartphone market as the company struggles to reap profits. It’s VR division hasn’t managed to do wonders either. HTC has been talking to Google for a potential takeover, the report said.
HTC has been struggling in the smartphone market for a while, as it failed to stop both Apple and Samsung in the premium smartphone market where it used to rule for a few years. The company’s latest smartphone, U 11, too failed to replicate the success of the One M7, perhaps one of the most successful premium Androidsmartphones.
Why Google might be interested
Not many know that both Google and HTC share a strong, healthy relationship. The Taiwanese company will always be credited for making the first-ever Android smartphone – HTC Dream, or the T-Mobile G1. Over the following years, HTC continued to be Google’s strategic partner for building high-end Android smartphones and tablets like the Nexus One and the Nexus 9 tablet. HTC was even behind the Google Pixel and Pixel XL smartphones, the search giant’s first attempt at making its own branded hardware. The buzz is that Google will lean on HTC for the Pixel 2 as well.
“Google has now its own branded smartphone with the launch of Pixel. This makes this deal very different from Motorola acquisition since at that time Google was not fully involved in the hardware space with “Google” branded devices. Although Pixel has received a very positive response from all quarters, Google needs better control over the value chain to set its phones apart from its competitors, especially Apple,” Navkendar Singh, Head – Mobile Devices Research: India & South Asia, IDC India, told Indianexpress.com through an email.
Buying out HTC may not come at a huge price for Google. HTC’s current market value is pegged at around $1.9 billion. HTC has a negligible share in the smartphone market but the company does have expertise in R&D and manufacturing which made China’s Huawei and Amazon also look at picking up the brand.
“If this deal goes through, it would mean that Google will have full ownership of the value chain to bring the device into the market – Software (Android), Hardware & Manufacturing (HTC ) along with HTC’s remaining distribution spread and telco partnerships. This puts Google in a lot better position to challenge Apple and create a more controlled experience for consumers,” Singh explained.
Indianexpress.com has reached out to HTC for comments.
How India was lost
Across all markets, HTC has failed to expand its market share. In India, once among HTC’s top geographies, it is now considered a legacy brand. “HTC is like a “dying elephant”, an ex-employee, who asked not to be named, told Indianexpress.com. Employees are well aware about the company’s struggles, and the prospects did not look great. In the past year or so, HTC has trimmed its staff strength in India considerably. Marketing budgets too have been cut and there is no marketing head since the exit of Manu Seth last year. Currently, the Indian arm is handled by Faisal Siddiqui, who also heads the rest of South Asia too.
HTC has been an active spender on R&D, but its local strategy often driven by perception in Taiwan did not work in the long run. For a while it did well with budget phones like the HTC Desire 816, but then company decided to stop phones under Rs 10,000 in India. HTC’s sluggish response to Chinese competition, and its aversion to go online both seem to have hurt the brand in India. Also, it is still among the few brands without a Make in India strategy though it announced the same in 2015 in partnership with Global Devices Network.