Google to buy part of HTC’s smartphone operations for $1bn

Google has announced a deal to acquire part of HTC Crop’s smartphone operations for $1billion.

This deal will not involve the purchase of direct stake, and HTC will continue to run its remaining smartphone business.

Google is to move its hardware capability with sales and product launches and last year hired Rick Osterloh, former Motorola executive will be running its hardware division.

“For Google, this agreement further reinforces its commitment to smartphones and overall investment in its emerging hardware business,” the search giant said in a statement.

HTC shares were on a trading halt on Thursday. HTC is a long-time partner of Google and manufactures US firm’s latest Pixel smartphone.

Google’s strategy to provide Android licensing free and profiting from embedded services like search and maps made Android dominant mobile operating system with 89% of the global market.

But it has long been frustrated by the emergence of many variations of Android and the inconsistent experience that has produced. Pushing its hardware will likely complicate its relationship with Android licensees, analysts said.

“HTC is past its prime regarding being a leading hardware design house, mainly because of how much it has had to scale back over the years because of declining revenues,” said Ryan Reith, an analyst at research company IDC.

“Unless Google wants to control hardware for its other businesses like Home and Chromebooks in addition to smartphones, then I don’t see this as being a bet that pays off.”

HTC who was selling 1 out of 10 smartphones globally has seen its market drowning from heated competition from Samsung, Apple and Chinese rivals.

“Its share price has also suffered steep declines over the past couple of years. The stock has fallen 12% so far this year, and the company is worth around $1.9bn.”, reported by The Guardian

HTC’s worldwide smartphone market share declined to 0.9% last year from a peak of 8.8% in 2011, according to IDC. Google’s Pixel also had less than 1% market share since it was launched a year ago, with an estimated 2.8 million shipments, IDC estimates.