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Google’s $1.1bn HTC deal cements hardware ambitions

Google has injected $1.1bn (£814m) into HTC in return for personnel that will work on its line-up of Pixel phones and the use of its intellectual property rights.

The search giant already had a close working relationship with HTC which produced and manufactured its flagship Pixel phone, which was released last year.

A follow-up device is expected to be released in the coming weeks which HTC is also thought to have been working on prior to the financial deal.

HTC said the move would not hamper its own smartphone ambitions and “is currently working on the next flagship phone, following the successful launch of the HTC U11 earlier this year.”

For Google, the agreement further reinforces its commitment to smartphones and overall investment in its emerging hardware business.

As well as smartphone engineers, Google will also have access to HTC’s intellectual property portfolio in order to support the Pixel smartphone family, largely seen as the company’s attempt to produce an in-house device that can compete against Apple’s iPhone.

“Our unmatched smartphone value chain, including our IP portfolio, and world-class talent and system-integration capabilities, have supported Google in bolstering the Android market,” said Cher Wang, chairwoman and CEO of HTC.

“This agreement is a brilliant next step in our longstanding partnership, enabling Google to supercharge their hardware business while ensuring continued innovation within our HTC smartphone and VIVE virtual reality businesses.”

In the Android smartphone market, Samsung produces almost 50 per cent of all devices. The next-largest company is Huawei, which makes just 6.4 per cent of smartphones, while HTC currently produces just 1.7 per cent.

“HTC has been a longtime partner of Google and has created some of the most beautiful, premium devices on the market,” said Rick Osterloh, senior vice president of hardware at Google. “We’re excited and can’t wait to welcome members of the HTC team who will be joining Google to fuel further innovation and future product development in consumer hardware.”

The transaction, which is subject to regulatory approvals and customary closing conditions, is expected to close by early 2018.

One of the reasons why Google might want to keep HTC afloat is to maintain competition in the Android smartphone sector in order to prevent too much power ceding to Samsung, the largest player.

HTC has been haemorrhaging money in recent years, with falls in its share price resulting in the company actually being delisted from the largest Taiwanese stock index in 2015.

Samsung has made moves in the past to create its own app store and system apps that run in conjunction with those from Google in an attempt to bring users into a separate ecosystem, potentially with an eye towards divorcing itself entirely from Android in the future in favour of its own in-house Tizen operating system.

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