With reported losses for nine consecutive quarters, a US$1.1 billion injection from Google came none too soon for HTC. The cash should help the company's financial predicament in the short run, and it's becoming clear that the Taiwanese consumer-electronics company will serve as the hardware arm of Google for its Made by Google product line, which includes Pixel Smartphones and Google Home, among others.
Unlike the love-hate relationship between Samsung and Apple, where the former supplies the latter with hardware like chips and display screens related to its unique selling proposition, the mutual gain between Google and HTC lies away from indirect conflicts of interest.
The new agreement gives Google access to 2,000 engineers of the HTC team that worked on the Pixel smartphone line, making up 70 percent of the smartphone-related technological assets and R&D capabilities of HTC. It also gives HTC the credibility fuel it needs as its gradually loses market share in the consumer-electronics space in the APAC region.
As the preferred manufacturer for Google's hardware portfolio, HTC looks set to reemerge as a credible supply chain and innovation partner for other, similar agreements, just as Samsung's consumer electronics supplier side division was critical to salvaging the brand's repute in the wake of last year's Galaxy Note 7 fiasco.
We asked industry insiders for their prognosis on HTC's future health.
Managing director APAC, Singapore
It is not for lack of product innovation that HTC lost the plot. Scroll back a few years and it was the first to pioneer a touchscreen smartphone at a time when Blackberry was the universal choice for high-powered business users. It bought a 50 percent controlling stake in Beats Electronics in 2011. Its team of product engineers were developing apps in gaming and entertainment.
While HTC had everything going for it, its failure to become top of class may simply boil down to the infinite pools of marketing budgets that mobile-phone companies consume for product differentiation, innovation, branding, new market entry, advertising and of course design, the latter being the most significant factor in smartphone success, particularly in Android markets where competition is rife and there is very little product difference among the various brands.
With cheaper, feature-rich Chinese phone brands like Oppo and Xiaomi chipping away its market share, and an ever-changing consumer marketplace in which price value is decisive and brand loyalty is fickle, it is not hard to see why HTC may have lost its appeal among consumers.
Where HTC has a distinct advantage, however, is with Vive. Following Google's acquisition of its smartphone division, it now has the money to invest in VR—the next battleground of all mobile handset manufacturers. As of very recently, it has already registered a trademark for Vive Eclipse in New Zealand.
Commercial director, Singapore
HTC is a solid brand, but in the Samsung-Apple duopoly, they struggle to stand out.
Google's acquisition of 2,000 staff for $1.1 billion is a clear indicator that the folks at HTC know what they're doing on the hardware side of the business, and the Google name certainly gives them validation that they're on the right path. Questions remain about [the virtual reality headset] Vive and their other VR products, but as a handset maker they've claimed a position in the chasing pack with Apple and Samsung. It's just hard to crack a duopoly of monster brands.
I think the future should be bright for HTC if they learn from their Asian neighbors at Samsung and their American partner/buyer/customers at Google.
Samsung created a small loyal following that built over time with the anti-Apple war-cry, with market-leading functionality and a solid product. This meant people could stand by an anti-Apple purchase with as good, if not better (usually better), a set of functionality as validation.
Google has brought together some of the world’s leading product designers on top of an amazing talent pool of developers, product guys, and geniuses in general. Just working with Google on the Pixel would have added value to HTC.
I think HTC would do well to follow Huawei and Samsung's model: keep building solid devices that deliver internationally but have a local twist (dual SIMs and other Asian tweaks, for example) and continue to innovate past the big boys.