back to article Google takes $1.1bn chomp out of HTC, smacks lips, burps

Google has formally completed its $1.1bn (£780m) takeover of a chunk of HTC, under which some 2,000 staff will transfer to work on the chocolate factory's Pixel phone. In a blog post, Rick Osterloh, senior hardware veep at the megacorp, said "building hardware is... hard," adding: "That's why I'm delighted that we've …

  1. Mephistro Silver badge
    Facepalm

    I think G is shooting its own foot here

    Making their own brand of hardware will cause Google to be seen by other phone makers as a menace. The kind of control that G has over Android would make it really easy for them to put said phone makers out of business, in a similar -but not identical- way to what Ms did in the nineties when they weaponized Windows against Novell.

    If G starts selling aggressively its hardware, they might see most of the Android market share vaporized in a few years, when other phone makers choose a different OS for their products. Probably a different Linux derivative for phones and tablets.

    One can only dream...

    1. CheesyTheClown

      Re: I think G is shooting its own foot here

      And Google will still make the repeat revenue from maps, search, advertisement, film sales, music sales, etc...

      Google can make their own phones... work with HTC to design them and then pay Samsung to manufacture them. We'll see a real alternative from China soon. RedFlag Linux was a bit lame... but I expect that China is well situated now to take up the mantle making a competitive telephone OS. 10 year ago... maybe not, but now China has tech talent and western business knowledge pouring from their ears.

    2. Charlie Clark Silver badge

      Re: I think G is shooting its own foot here

      If G starts selling aggressively its hardware…

      Nothing so far to indicate that they're planning to do this. They're buying engineers not sales and marketing people.

      This could be exactly what it looks like: inhousing the prototype department so that they can release new products faster. Google wants its services on our phones and in our homes but it doesn't necessarily have to supply the hardware. But I guess we'll just have to wait and see.

      other phone makers choose a different OS for their products.

      What kind of competitive and well-supported OS do you expect to be available? No one has yet come up with one at a price manufacturers like.

    3. Anonymous Coward
      Anonymous Coward

      "The kind of control that G has over Android"

      Android is OpenSource. anyone can create with it. Many large companies commit code to it (Sony, LG, Samsung to name a few).

      Google are very at what they do. That is where everyone is else is failing. They need to start hiring better people, they need to start listening to the users.

  2. Stuart 22

    A lesson learnt?

    "However, the deal does have echoes of Google's ill-fated $12.5bn (£8.8bn) acquisition of Motorola Mobility in 2012, which it later offloaded to Lenovo for a mere $2.91bn (£2bn). Not to mention Microsoft's disastrous purchase of Nokia's phone biz for $7.2bn (£5.1bn) in 2013. ®"

    Well no. This time Google bought the bits they really need, people and patents. Not a manufacturer. They will presumably, like Apple, continue to outsource the clog iron bit.

    A more interesting question, to me, is whether the rump of HTC without its top flight developers will just wither and die - or is there any agreement for Google's IP & design to trickle down giving HTC an advantage in the Pixel-Lite market.

    You know, the only one most of us can afford or are prepared to invest in a device with less than a 24 month horizon.

    1. ratfox Silver badge

      Re: A lesson learnt?

      Actually, it should also be noted that Google did not sell all of Motorola to Lenovo for $2.91bn. They had already sold another part of the business for $2.6bn; they kept some of the research team; they kept most of the patents and the cash. What's more, by "acquiring" the previous losses of Motorola, they were able to reduce their own taxes for a few years.

      As you can read on this most excellent website: https://www.theregister.co.uk/2014/01/30/google_motorola_mobility_lenovo_sale/

  3. johnnyblaze

    Repeat after me

    ...it's not about the patents. It's not about the patents!

    Seriously, Google have aquired a lot of IP and talent, but haven't aquired a whole company, which is probably the right thing to do. Now all Google need to do is see sense, and bring back the beloved Nexus brand at the low/mid range and keep Pixel at the high end. Pleeeeease..

  4. CheesyTheClown

    What do you mean competitive portfolio?

    HTC and Samsung are not in the same business and never have been.

    Samsung is an electronics manufacturer who has optimized the hell out of the supply chain by buying companies such as Sharp LCDs, built their own storage company, is one of the most advanced semiconductor fabs... has one of the most successful industrial engineering teams, has 100% automated fabrication lines in most segments... etc... Samsung has no peer in the industry other than possibly the Chinese government who owns things like Foxconn and many other companies.

    Samsung produces nearly every single component of every phone it ships. They also probably have investing interests in many raw material suppliers such as oil companies, mining companies, recycling firms, etc... they are a conglomerate capable of producing a telephone for barely more than the human costs.

    In addition, nearly every other vendor of phones in the world has to buy at least several parts from Samsung or a Samsung owned company just to make their own phones. Or at least they probably have to buy from companies who pay Samsung to manufacture their parts for them.

    Then there's HTC... who makes pretty much nothing but the circuit board and the case. They code some software too I suppose. They have absolutely no revenue stream following the moment the phone is shipped and paid for. The only possible way for HTC to make a profit is to negotiate great manufacturing deals and supply chain deals. They don't own anything once the phone ships and all that's left is liabilities. They have to pray they can remain price competitive with companies like Samsung who pays probably 1/10th as much as they do to make a phone. They have to pray that on their pathetic profit margins that the user doesn't need support covered under warranty.

    Most people don't upgrade phones anymore. I'll get an iPhone X next week which is given to me as part of my new job. I don't really plan on using it much since I prefer my iPhone 6S Plus. Apple still makes money from me by selling me movies. I don't buy music anymore since I have like 1200 songs in my library and I listen mostly to audio books. I pay for my kids to buy apps once in a while.

    If Apple gets it working out here in Norway, I'll experiment with Apple Pay.

    Now... for the next killer feature for phones

    Identity

    Apple and Google should work together to standardized a secure method of identifying yourself legally. So for example, an app which is also your passport and drivers license. So you have a QR code which pops up on the screen and directs people checking ID to a site which verifies whether you are who you say you are.

    1. Charlie Clark Silver badge

      Re: What do you mean competitive portfolio?

      Samsung produces nearly every single component of every phone it ships.

      Including the Qualcom chips it uses?

      1. Anonymous Coward
        Anonymous Coward

        Re: What do you mean competitive portfolio?

        "Samsung produces nearly every single component of every phone it ships.

        Including the Qualcom chips it uses?"

        Samsung has Exynos and Qualcomm options - the challenges Qualcomm had with early 8XX chips gave some insights into the reason for Samsung using both and it wasn't just performance...

      2. Tigra 07 Silver badge
        Thumb Down

        Re: Charlie

        "Samsung produces nearly every single component of every phone it ships.

        Including the Qualcom chips it uses?"

        *Cough * nearly *Cough *

      3. Dinsdale247

        Re: What do you mean competitive portfolio?

        Well, yes. Of which they are the largest customer in the world so get them at a much lower cost. But, they have put their own processor in a number of phones now to test the waters.

        https://en.wikipedia.org/wiki/Exynos

    2. ratfox Silver badge
      WTF?

      Re: What do you mean competitive portfolio?

      Now... for the next killer feature for phones

      Identity

      Apple and Google should work together to standardize a secure method of identifying yourself legally

      What the hell are you talking about? The vast majority of countries have an ID card or some other official document which serves this exact purpose. Why would you need a phone for that??

      It's like you're claiming we need an app to finally enable us to unlock the door of our home. Killer feature indeed.

      1. JLV Silver badge
        Trollface

        Re: What do you mean competitive portfolio?

        Citizen, governmentally-accepted official forms of identification now include:

        - iPhone X - follow this link to our affiliate referral program

        - anal DNA probes

        - sworn affidavits, delivered in person, by 2 persons who visually witnessed your emergence from the birth canal.

        Seriously, with all the fail we're seeing in digital security, you want to increase identity theft risks by relying on electronic means a bit more? India's biometrics system seems to have concerns with it, for example. Differentiate a bit more between affluent and less affluent people while you are at it, base convenience on their phone's list price.

        I welcome anything that enforces a scammer's documentation having to be scrutinized in paper form.

        And awarding this type of preferential recognition to a company, especially one like Google (whose phones only get 3 yrs of security updates btw), smacks of crony capitalism at its worst. Not that your other hero, Samsung, does much better on the patching end either.

      2. Tigra 07 Silver badge

        Re: What do you mean competitive portfolio?

        I like that idea actually. Some of us don't have a method of legally identifying ourselves unless we get a passport or drive. I have to carry my passport when i think i may get IDed (Tesco mainly) and a reputable offering from Google or just built into Android could serve this purpose and possibly reduce thefts by tying your ID to the device.

        Heck, just build it into Android Pay?

    3. Dinsdale247

      Re: What do you mean competitive portfolio?

      Well said, except you didn't mention they make satellites, rockets, heavy equipment, and have an entire construction arm that is responsible for some of the biggest buildings in the world.

      There is no company like Samsung.

  5. Matthew Smith

    I loved my HTC Desire

    The first decent android phone that was a viable alternative to an IPhone. I loved it dearly. Just a shame that HTC couldn't continue the success.

    1. Anonymous Coward
      Anonymous Coward

      Re: I loved my HTC Desire

      I was very fond of mine too. In fact I still am, as I still have it as a back up phone (albeit reflashed to increase the storage capacity available for applications). However, the first really viable alternative to the iPhone from HTC was probably the earlier Hero.

      Having owned examples from both firms, all things being equal I'd still take an HTC over a Samsung. As it stands I've settled on a OnePlus instead.

  6. Uncle Ron

    Mystery to Me...

    Don't understand why HTC has fallen on such hard times. I have been using an HTC One - M7 for several years and have been -very- pleased with it. It is one or two generations back from current, but it has nice resolution, runs all my apps (except DTVN and Sam's checkout thing,) it takes kickass vids and very nice pics, I have several dozen movies stored on it, it runs Netflix and Plex very nicely, excellent 4G performance, and still has very good battery life after 2+ years. I just don't get why HTC isn't doing better. Perhaps they just don't understand marketing.

    1. Anonymous Coward
      Anonymous Coward

      Re: Mystery to Me...

      "Don't understand why HTC has fallen on such hard times. "

      HTC are totally exposed to the brutal, and mostly low margin business of making phones, and have no other income stream to pay for business or technical failures. Apple have a broader business model, lock-in of customers, and a brand to carry off high margins. Samsung have fingers in a million and one pies, but also hold vast market share in the profitable high end Android market. Every other Android maker is slugging it out in the low and mid end market where profits are thin, competition intense, and product standards very high compared to a few scant years ago. Even making a high end competitor can't help most of these companies, because unless they get the volume in the high end sales, they won't make money. And a better product from a challenger brand won't sell as well as the intensely marketed Sammies and Apples. Look at LG's interesting experiments in premium phones - great ideas, but no real commercial success.

      And with the Chinese makers turning out plenty of damn good phones for very low prices, HTC struggle. Have a look at some of the excellent phones you can get for under 200 dollars/quid and then think how HTC can make much money in a market with those available. And despite owner affection, most phone brands aren't as valuable as their owners think. Look how the Nokia name didn't save Windows phone, despite it being one of the two best known phone makers on the planet. And sticking it on somebody else's Androids doesn't seem to have set the world on fire either. So the HTC name doesn't justify paying more.

  7. Kevin McMurtrie Silver badge
    FAIL

    GFail

    Google doesn't have the focus and attention span to build hardware. They try and fail over, and over, and over again without learning anything. There's also a growing population that knows Google is only building hardware to spy on you more. Removing the headphone jack gets people to turn on Bluetooth so tracking beacons work, removing the microSD card forces people to use more of Google cloud services, and the AI chip is there to help Google anticipate, observe, and manipulate your every move in the name of marketing revenue.

  8. Dinsdale247

    As I said..

    As I said when Android came out: "Google is not your friend".

    Every single phone vendor except one or two will wind up in the same place as HTC. Sony phones are not long for this world either. Google played the same bait and switch that Nokia played with the Symbian venture prior to Android (and in-fact, threw petrol on the tiny little flame that was non-google Android at the time). Samsung got stung on that one too so they're hedging bets with Tizen.

    "Free things" are never free and big companies are not your friend. It's unfortunate that libhybris has faltered. It provided a shim layer for Android/Bionic drivers to run on a standard GLibc kernel. It was the only way out of this mess.

    I'm sure glad my BB Passport is such a tank.

    1. Anonymous Coward
      Anonymous Coward

      Re: As I said..

      "Sony phones are not long for this world either."

      Horsecrap. Sony have said they are in it for the long run. They sold 18m mobiles last year, and pretty small losses (~50m). Other years they have been in profit. Whilst it's not a profit making sector, it's not a huge loss maker their, it's an important sector to be in.

      LG losses are massive in comparison.

  9. Anonymous Coward
    Anonymous Coward

    Looking forward to some great flip out keyboard android phones!

    My TYTN II died the death of the "Red Light" but until that horrible sign of inexplicable hardware failure, was a very useful device indeed, a very well thought-out design. HTC has always innovated, I suppose it's future depends on quite how much Google stifle them with their control freakishness.

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