Rumors swirled last year that Google would acquire troubled smartphone maker HTC as the release of the Pixel 2 approached. However, the deal eventually announced was much more limited in scope. Google agreed to acquire most of HTC's design team for $1.1 billion. Today, Google says it has completed the deal.
Google says it's getting about 2,000 engineers, designers, and support staff from the deal. The employees won't have to relocate as Google already has extensive operations in HTC's native Taiwan. Sources close to the deal claim HTC is giving up a substantial majority of its R&D team in the deal. This division was responsible not only for working on HTC's branded phones, but also contract jobs like the Google Pixel phones.
This move marks a substantial expansion of Google's hardware efforts. The first-generation Pixel phones were designed by HTC under Google's direction. The same is true of the second-gen Pixels, but HTC shared that responsibility with LG. Having its own army of hardware designers could let Google take on most of the preliminary work itself, then pass off the manufacturing to a company like HTC.
Going forward, this instantly makes Google a major player in the smartphone industry. The Pixel phones have sold in relatively small numbers, but HTC's former R&D team with Google resources might be able to accomplish some amazing things. Google's hardware chief Rick Osterloh has stated he hopes Google will be moving a significant number of phones within five years. Having its own in-house designers is a big step in that direction.
On HTC's side, the $1.1 billion cash infusion keeps the lights one, but the once major smartphone player is still on a downward trajectory. It hasn't had a profitable quarter in years, and Sprint is the only US carrier selling its phones anymore. Selling off its design team to Google doesn't help it turn that trend around. In fact, it might accelerate things.