Google signs agreement with HTC

[EddieRingle]

Important bit:

> That’s why we’ve signed an agreement with HTC, a leader in consumer electronics, that will fuel even more product innovation in the years ahead. With this agreement, a team of HTC talent will join Google as part of the hardware organization. These future fellow Googlers are amazing folks we’ve already been working with closely on the Pixel smartphone line, and we're excited to see what we can do together as one team. The deal also includes a non-exclusive license for HTC intellectual property.

[grzm]

Please don't use code blocks for text quoting. They cause side scrolling which can be annoying in desktop browsers and nigh unreadable on mobile.

Common methods to quote text blocks on HN are to use a > prefix and/or asterisks to italicize the quoted text.

Edit: Thanks for updating!

[yeukhon]

The "non-exclusive" bit is actually quite important here. This means anyone can get IP from HTC, and I am not sure if that's a good deal at all, if Samsung comes along to pour down couple billions. What isn't clear is whether Google will have access to the exclusive HTC intellectual property at all.

[maguay]

Random things that strike me about this deal:

- HTC's stock price has been going down for the past 5 years, and EPS was down sharply recently. Does this make HTC more or less viable on its own going forward?

- Apple finally made a VR push with the upcoming macOS High Sierra and iMac Pro—along with the HTC Vive. Google didn't fully acquire HTC here, and HTC's trajectory was already tied to Android, but still seems an interesting wrinkle there.

- Samsung continues to hedge their bets, most recently with Bixby. Really wonder if Google's continued hardware investment will make them seek more of their own path.

- Why would Google acquire just a team from HTC? Seems like the oddest of acquihires yet.

[ytch]

> Why would Google acquire just a team from HTC?

IIRC, The license agreement[1] between HTC and APPLE will be voided if HTC is acquired by another company, maybe this strategy can avoid this situation.

[1] https://www.apple.com/newsroom/2012/11/11HTC-and-Apple-Settl...

[LiweiZ]

Apple has to push something new (but iOS apps with AR were there as late as around 2011) and major "next big thing" to play catching up. Apple as a creature is done. It is just following the phenomenon momentum founded by Jobs to maximize profit. Once the day it goes past the max profit tipping point, what is real will show up. Money is the quantitive fact that few would go against, once this fact changes, opinions will soon emerge. My personal thoughts.

[crispytx]

Yeah, why would HTC agree to something like this? Sounds like Google got a hell of a deal getting to pick which engineers and IP they want without having to buy the whole company.

[scottlegrand2]

So this is like an acqui-hire except that the employees don't see any benefit from it except that they are now Google employees?

Meanwhile, HTC Executives pocket a huge wad of cash? Great.

[s73ver_]

Isn't that any acqui-hire? The people who do the work are traded like cattle and usually don't get anything out of it. Worse, sometimes they did have equity in the company, but that's now traded for equity in the new company, but with a reset on the vesting time period.

[geodel]

Good. You discovered a bit on how businesses work. In this case it ended little beneficial to many employees as instead of being laid off due to HTC downsizing or shutdown, they get to work for Google.

[jumpbug]

Perhaps the business unit wasn't doing well and the alternative may have been lost jobs?

[tanilama]

TL;DR, Google doesn't acquire HTC, they bought a team.

[gvb]

From the other side of the coin, HTC sold their "seed corn[1]." Without their (premier?) phone development team, did they sell off their path to regaining phone market share?

[1] http://www.thefreedictionary.com/To+eat+the+seed+corn

[maruhan2]

So confused. So in essence, Google bought a team from HTC?

[ytch]

Yeah, from announcement of HTC to Taiwan's stock exchange,

Google buys HTC's Pixel team, license to HTC's IP, and a RF lab (Subsidiary of HTC) for 1.1 billion USD.

[vvanders]

The bigger thing is the IP acquisition. That's largely why they grabbed Moto and then spun it out. With this they can skip the middle step.

[bcatanzaro]

"It’s still early days for Google’s hardware business."

Why no mention of Motorola in 2011? Google bought it for $12.5B, and sold it 2014 for $3B.

I think it would have made the blog post better to give some explanation for why Things Are Different This Time.

[jonas21]

The way this worked out was that Google spent $12.5B, but they got:

Cash: $3B

Tax Credits: $1B

Sale of Motorola Home: $2.4B

Sale of Motorola Mobility: $2.9B

---------------------------------

Total: $9.3B

So Google ended up paying about $3.2B for Motorola's patent portfolio, which was valued at $5.5B.

https://dealbook.nytimes.com/2014/01/29/did-google-really-lo...

[sangnoir]

Google bought Motorola patents that came with hardware businesses attached for defense purposes, not because they wanted in on the hardware business. This was after they found themselves unarmed during a thermonuclear patent war.

Google dropped the hardware businesses and kept the patents. The patent market was notably frothy at the time, and conventional wisdom then valued Motorola's patent chest at $4.0-4.5 billion (Apple + MS consortium bought the comparable Nortel trove for a price in that ballpark). If that value is correct, then Google made a profit on buying and selling Motorola (patents + Moto Home + Moto Mobile).

[tw04]

So two things. The title is LITERALLY: "Google signs agreement with HTC, continuing our big bet on hardware" - notice the continuing. The guy writing the blog post came from Motorola... so I don't think he's trying to hide it.

As others have mentioned, Motorola was 90% about the patents because they were fighting trench warfare with Apple AND Microsoft at the time. And 10% about having some say over a premium phone that wasn't full of garbage overlays. They were at war with Samsung over Touchwiz and Tizen at the time. So ya... it was 100% a strategic move, and exactly why the bailed as soon as humanly possible.

[spacehunt]

HTC's press release raises even more questions -- they claim they will continue to develop the next flagship phone?

> HTC will continue to have best-in-class engineering talent, which is currently working on the next flagship phone, following the successful launch of the HTC U11 earlier this year. HTC will also continue to build the virtual reality ecosystem to grow its VIVE business, while investing in other next-generation technologies, including the Internet of Things, augmented reality and artificial intelligence.

http://www.htc.com/us/about/newsroom/2017/2017-09-21-htc-goo...

[desdiv]

I read it as:

HTC will continue to develop HTC's next flagship phone.

Google will continue to use the HTC Pixel team they just brought to develop Google's next Pixel flagship phone.

[thasaleni]

I think this is great for HTC, HTC is really good on hardware, and are only really struggling with marketing their phones, partnering with Google is almost a no brainer

[CrunchGo]

I'm very excited about google's future plans. Anyone else feel like this is their path towards competing with apple and samsung in the long run?

[blocked_again]

As long as you don't give a fuck to your privacy you should be very excited.

[atomicnumber1]

So, a billion dollars for about a 100 engineers.

[allenleee]

According to CEO of HTC (Live on TV),it's not just 100 but 2000 employees.

Sources(Eng): https://www.bloomberg.com/gadfly/articles/2017-09-21/htc-mes...

[shard]

Not just 100 engineers, but also a non-exclusive license on HTC patents. Not knowing the terms of the license it's hard to value, but I would suspect it's a significant chunk of the $1B.

[njarboe]

$10 million each. Google might think that is an ok deal for the right people. Google market cap ($650 billion) divided by number of engineers (~40k) is $16 million.

[bitmapbrother]

>Peter Shen, HTC’s chief financial officer, said that HTC would still employ more than 2,000 research and design staffers after the deal is done, down from around 4,000, according to the New York Times. That makes today’s announcement more of an acquihire of talent than a traditional acquisition of resources.

[cloudwalking]

A lot cheaper than Instagram.

[dmitriid]

Google has desperately needed its own hardware for several years now.

This is especially apparent this year. Just to name a few things:

- Apple is much later to the AR game than Google, yet can push AR to ~200 million devices at the push of a button. Google has had Tango for a while now, and can only push it to a very small number of phones (compared to Apple's)

- A11 bionic chip is so far ahead, it's not even funny anymore, and is married to all other parts of the hardware and software. Google has nothing that's even close to this.

- "Kinect-in-a-phone" sensor strip of iPhone X. Even if Google has the know-how, it can never provide the same features, because they don't have their own hardware.

"Owning the stack: The legal war to control the smartphone platform" by Arstechnica remains as relevant as ever, https://arstechnica.com/tech-policy/2011/09/owning-the-stack...

[Zigurd]

Google's fundamental need is a coherent and competitive OEM ecosystem. It so happens that making hardware, like Microsoft makes Surface products, is one way to help that along. It used to be accepted wisdom that when a platform provider competes with their ecosystem partners, that's a bad thing. Now it's "complicated."

For example, let's suppose Android One takes off and all the cheaper-tier OEMs let Google handle the OS updates, and let's suppose that lights a fire under Samsung and other upper-tier OEMs to provide more-timely updates for longer. Does Google still need to make 3% of the hardware market share?

[nath12]

No one else hears this and thinks vertically integrated monopoly? What if Google advantages their own hardware over competitors, which in turn will decrease market competition and hurt consumers

[nolok]

You mean, do what Apple does, what Samsung tried with Tizen, and what pretty much everyone has done for mobiles outside Android / Windows mobile ?

[xbmcuser]

I was really hoping they would at least take the HTC distribution and servicing channels to sell pixel phones more widely instead of just a few countries like currently.

[KGIII]

I'm not seeing anything on the blog that says the will or won't do that. So, I guess you can keep hoping, for now at least.

Edit: specifically, I don't see anything that indicates they won't distribute it more widely. Sorry for being unclear.

[kitd]

OT, but but I find really irksome Veep-type blog posts that jump indistinguishably between what 'I' did and what 'we' or 'our team' did, as if there's no difference.

[sidcool]

So is this an acquisition or a recruitment drive?

[ytch]

Much like acquisition.

From some local rumor (maybe from HTC's Taiwan employee, but not confirmed yet), Google won't acquire all team member, they want RD mostly, not the management people.

And google will have a internal interview for those RD to decide who can stay, then sign a two year work contract with them. so that's some different compare to other google employee.

[ytch]

More leak from HTC's internal mail to Pixel team:

https://i.imgur.com/krONzs1.jpg

Rick Osterloh will come to Taiwan for detailing the next step to them.

[patryn20]

When any company gets large enough they become a repository of technical failures and an acquirer of the same.

Unfortunately that ultimately matters little to stock value and market share.

[AbeEstrada]

I think Google wants the VR (HTV Vive) team.

[akvadrako]

That's precisely wrong. VR is one of the business units that google isn't getting any part of.

[microcolonel]

It'd be great to have a trilateral collaboration between Valve, Google, and HTC on that. Google would have the mobile platform stake, Valve the high end stake, and HTC the hardware stake.

However, they bought an RF lab from HTC, so it's probably a mobile product, not the VR product.

[dmitriid]

No. They have no need for the VR team at all.

What they really need is their own smartphone hardware team.

[tkubacki]

ads money will feed engineers - good news

[thrillgore]

I did a literal spit take when I saw this. Are they doing this for phone production or for the Vive/VR?

[SeoxyS]

Didn't quite work out for them last time… why will this be any different than Motorola?