Appliances and Electronics Our insights capture shifts in consumer lifestyles and themes impacting the global consumer appliances, electronics, and toys and games markets. Themes include new business models, sustainability, innovation and the future home.

Google Buys HTC: Buying a Friend for US$1.1 billion

Wee Teck Loo Profile Picture
Wee Teck Loo Bio

HTC, a pioneer in the development of the Android hardware, halted the trading of its shares and announced that Google has bought a part of HTC’s workforce that’s currently working on the Pixel phone.

HTC reported revenues of NT$16 billion (US$0.5 billion) in the last quarter but a -13.6% operating margin. The cash from Google provides HTC with some breathing space, as the company tries to move into AR/VR headsets with its Vive range. The global AR/VR headset market is projected to be worth US$3.6 billion in 2018.

Buy a friend

Google bought Motorola’s mobile business division in 2011 for US$12 billion. Motorola’s vast portfolio of patents in the mobile space was needed to shelter manufacturers using Android (and Google) against lawsuits from Apple and Microsoft and other companies. The success of Android (and Google’s revenues from advertising) hinges on getting the OS onto as many manufacturers and as many devices as possible and hence, Google sold Motorola to Lenovo a few years later.

The purchase of HTC is for a totally different reason altogether. Google’s Pixel phones are currently an OEM from HTC. Google is paying US$1.1 billion to take over the HTC team that is currently working on the Pixel phones. Having a dedicated team allows Google to launch its own smartphones that are well integrated with Google’s own suite of software and apps.

A friend and a foe

Samsung and Apple continue to dominate the smartphones market, with a combined market share of 34% in 2017. Huawei and Oppo are ranked third and fourth but their combined sales are still lower than Samsung in volume terms. Clearly, Samsung is critical to the success of Android (and Google). Not content to be just a hardware manufacturer, Samsung tried to launch its own OS, Tizen, but rather unsuccessfully. Google signed a cross-licensing agreement with Samsung, effective for ten years in 2014, that helps both companies defend against potential litigation and has brought the two companies closer.

Samsung could still be tempted to launch its own OS as the company tries to draw revenues from services rather than just hardware sales. Strengthening Google’s own mobile team and helping other smartphone manufacturers like LG and HTC that are struggling can help Google combat the might of Samsung, albeit to a small extent. Google needs other smartphone manufacturers to be successful so that there are more users of Android and Google makes money from advertising and other services from smartphone usage. While LG is also struggling in the smartphone space, LG has its hands on many other businesses. HTC is a lot more vulnerable and hence, the transfer of the pixel team.


Interested in more insights? Subscribe to our content

Explore More

Shop Our Reports

Consumer Electronics: Half-Year Update H1 2023

Sales of consumer electronics were negatively impacted as consumers cut down on discretionary purchases as prices of electronics products escalated despite the…

View Report

Global Inflation Tracker: Q2 2023

This report examines inflation levels and drivers globally and in key countries. Global inflation is moderating, although volatility in the energy markets and…

View Report

Asia Pacific Consumer Trends: How Self-love and Individuality are Taking Centre-stage

The Asian consumer is changing. Traditional values that served the collective in terms of both society and the family are on the wane, with COVID-19 lockdowns…

View Report
Passport Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. Track existing and future opportunities to support critical decision-making across all functions within your organisation Learn More