Google agrees billion dollar deal to buy part of device manufacturer HTC
Google has agreed to buy part of device manufacturer HTC for 1.1 billion US dollars to expand its efforts to build phones, speakers and other gadgets equipped with its arsenal of digital services.
It is buying the HTC engineering team that built the Pixel smartphone for Google in a cash deal, the companies said.
Google is also getting a non-exclusive licence for Taiwan-based HTC's intellectual property to help support Pixel phones.
The deal underscores how serious Google is becoming about designing its own family of devices to compete against Apple and Amazon in a high-stakes battle to be the technological hub of people's lives.
"We think this is a very important step for Google in our hardware efforts," Rick Osterloh, Google's senior vice president of hardware, said at a press conference in Taipei. "We've been focusing on building our core capabilities. But with this agreement, we're taking a very large leap forward."
The deal, which needs regulatory approval, is expected to close by early 2018.
Over the past decade, Google had focused on giving away its Android operating system to an array of device makers, including HTC, to ensure people would keep using its ubiquitous search engine, email, maps, YouTube video service and other software on smartphones and other pieces of hardware.
But that changed last year when Google stamped its brand on a smartphone and internet-connected speaker. HTC manufactured the Pixel phones that Google designed last year, paving the way for this deal to unfold.
HTC's chief financial officer Peter Shen said about 2,000 engineers will be transferred to Google. The staff are "primarily focused on research and development," Mr Osterloh said.
Although Android powers about four out of every five smartphones and other mobile devices in the world, the software can be altered in ways that result in Google's services being de-emphasised or left out completely from the pre-installed set of apps.
That fragmentation threatens to undercut Google's ability to increase the ad sales that bring in most of the revenue to its corporate parent, Alphabet, as people spend more and more time on smartphones and other devices instead of personal computers.
Apple's iPhone and other hardware products are also particularly popular among affluent consumers prized by advertisers, giving Google another incentive to develop its own high-priced phone as a mobile platform for its products and ads.
Google also wants to build more internet-connected devices designed primarily for home usage, such as its voice-controlled speaker that is trying to catch up with Amazon's Echo.
The Home speaker includes a digital concierge, called Google Assistant, that answers questions and helps manage people's lives, much like the Alexa in Amazon's Echo.