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Why Is Google Looking To Buy HTC?

HTC who recently parted Company with their General Manager and Marketing Director in Australia is believed to be in discussions with Google with a view to the search Company buying the struggling phone maker outright.

It was only a few weeks ago that the distributor of a highly successful phone brand in Australia was looking at making an offer to take over the HTC operation after the departure of senior management.

HTC is the Company that built the first Windows phone and the first Android smartphone.

The big question now is why Google wants to buy HTC who have recently been investing heavily in Virtual Reality technology.

Taiwan’s Commercial Times claims that Google is struggling to mass produce its own hardware.

Currently they are using both LG and HTC to make their devices.

HTC is already the contract manufacturer for the Pixel, and there have clearly been issues producing that device in the quantities Google needed.

Engadget claims that what’s plausible is that Google wants HTC’s mobile division without the added baggage of Vive.

Rumors of HTC’s demise has been raging for some years, and the business is now in serious trouble despite the Company delivering some magnificent smartphones such as their recent U11.

The single biggest problem for HTC has nothing to do with the quality of their devices, it’s a lack of westernized marketing and a failure by the Company to invest in none Asian marketing experts. At the higher end, HTC doesn’t have the advertising clout to go toe-to-toe with Samsung or LG for the simple reason that HTC Asian management don’t know how to market themselves in Western markets.

As one publication said, “Would you rather buy HTC’s U11 or a Galaxy S8, V30 or Nokia 8”?
In the past eight months, the company’s sales have fallen as far as 54 percent below what they were just a year ago.

Back in 2015, ChannelNews pointed out several problems with HTC marketing in Australia. Recently the Company has had a lot of success selling both their value and premium phones at JB Hi Fi. Now the Company has lost two of their most senior managers, Rob Saviane the former Marketing Director and Ben Hodgson the former General Manager.

When outfits like Sony and LG lose millions on phones, they simply shift cash from profitable divisions like PlayStation and TVs to cover the gap. HTC has no such insurance plan because its core business is the manufacture and sale of smartphones.

As the Android world has seen profits evaporate for all but a few, HTC’s dominance and prestige have withered.

If Google does pick up HTC they will get it for next to nothing. What they will inherit is one of the world’s best phone makers and an R&D team that is up there with the best there is. Combine this with Google capabilities and one has an extremely powerful operation.

But there is a downside, Google has done this before with Motorola and this deal failed miserably.

Google spent $12.5 billion to buy Motorola back in 2011. There’s also the fact that Google, like so many big tech companies, can use some of its overseas profits to fund the purchase.

Engadget claims that an additional reason Google bought Motorola, espoused by Forbes, was that Google used Motorola as leverage over Samsung. The search engine was annoyed that its Korean frenemy was becoming too popular and was hiding Android behind its own TouchWiz skin. Coupled with Samsung’s development of Tizen as an alternative operating system, Google needed to bring its troops in line.

Google would sign a deal with Samsung, offering it the protection afforded by Motorola’s patents, if it left Android alone. The minor existential threat dealt with, and Google could sell off Motorola, knowing that the Korean giant was no longer able to become a full-blown rival.