This would be interesting. Currently Google makes a loss on Android development and licensing. They make this money back by using Android as a marketing/advertising vehicle for their other products.
If they were making significant money through selling phones directly that could change the dynamic.
HTC is the device manufacturer for the Google-designed Pixel phones. The easiest way to look at this is just a straightforward vertical integration. I don't see that there needs to be much strategy involved beyond "we think Pixel is going to sell well and want to make more money on it".
Google has much stronger brand and marketing and will have vertical integration: new phone can have exclusive features like assistant, Google home, chromecast, Google VR integration etc.
Another question is Google didn't succeed with Motorola, what will be different with HTC now? Experience?
The Motorola situation was baffling, the first generation Moto X, G and E handsets were non-nexus phones finally done bloody right, and as far as I know they flew off the shelves (especially the Moto G)
I know the margins were pretty thin but I don't know how they could consider that anything but a success.
HTC makes the Pixel; cutting out he middleman gives Google reduced overhead (if nothing else, on contract management) and more control with that; if HTC isn't making money on the overall smartphone business to start with, the price may be attractive enough that Google wins on that advantage alone.
Google made $31 billion in revenue from Android, according to court filings in the Oracle case.
Base Android (AOSP) is free, but Google Play Services costs real money. Add in advertising & their cut of app sales, and Android is a huge profit center.
"makes money for Google in two ways: adverts supplied by Google shown on Android phones, and revenue Google takes from its mobile app store, Google Play." [1]
So, for sure, they're making money from/via Android. But not from Android itself, or from many of the Google apps directly.
I'm sure it's quite easy for journalists and others to mix up revenue from "Google Play Services" (aka the non-open source parts of Android) and "Google Play" (the app store), even though they are very different.
The rumours I've heard is that Google charges about $10/phone.
Yeah, and Samsung had their phones fucking explode. I'd take an occasional stray ad over that any day of the week. That said it's a shame that HTC discontinued their own apps, which were excellent and started to rely on second-party shitware.
Some speculate that the Motorola acquisition was for their patent portfolio rather than their product line. I don't know how much credence to give that theory. An argument in favor of it is how quickly the Motorola phone business (minus the patents) was sold off to Motorola and an argument against it is that Motorola's former patents don't seem to be especially valuable to Google.
I think the idea was to keep a defensive portfolio of patents so Google could threaten to countersue Apple or Microsoft if they ever went after an Android OEM. Kind of like a Tech company version of a nuclear deterrent.
Yes, although everything that I've read suggests that Motorola's patent portfolio was light on anything related to smartphones so it provides little in the way of a litigation deterrent for competitors of Google or Android OEMs.
What other business units does HTC have besides the smartphone business? They've got the Vive, but I thought manufacturing smartphones was the majority of their business.
If that's sold to Google, what's left of the business?
Because they are a stock market listed company, the way to check this is to read their annual report[0], which can be found by searching 'htc annual report'. The latest is from 2016, published March 2017. VR and Healthcare are listed.
Interestingly, HTC bought a company I used to work for way back in 2010, that was focused on cross-platform mobile video solutions (including content discovery/DRM/licensing). They sold it like a hot potato only a year later after apparently changing corporate strategy, I suspect for legal reasons (we had large contracts with most rival manufacturers: Nokia/Sony Ericsson/LG/Samsung/etc.). They also bought the Beats brand in 2011, which IIRC has recently been acquired by Apple. For a nominally famously 'engineer run organization' HTC certainly seems to vacillate in its strategic development.
HTC offers no value add to Google. The future, as seen in financials, is in vertical integration.
The Samsung and LGs of the world make their own screens, storage, RAM, ... They can compete at the lower end on cost, and their vertical integration allows them profits to innovate at the top end. HTC has no expertise, either in a particular component, or in software.
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[ 5.1 ms ] story [ 39.1 ms ] threadIf they were making significant money through selling phones directly that could change the dynamic.
It's not immediately clear why Google would be better positioned to do so with these assets
Another question is Google didn't succeed with Motorola, what will be different with HTC now? Experience?
I know the margins were pretty thin but I don't know how they could consider that anything but a success.
Base Android (AOSP) is free, but Google Play Services costs real money. Add in advertising & their cut of app sales, and Android is a huge profit center.
"makes money for Google in two ways: adverts supplied by Google shown on Android phones, and revenue Google takes from its mobile app store, Google Play." [1]
So, for sure, they're making money from/via Android. But not from Android itself, or from many of the Google apps directly.
[1] http://www.mercurynews.com/2016/01/21/googles-android-genera...
The rumours I've heard is that Google charges about $10/phone.
Granted, mistakes look to have been honestly made on the part of some, but the fact that this made it out the door is all I need to know.
Interestingly, HTC bought a company I used to work for way back in 2010, that was focused on cross-platform mobile video solutions (including content discovery/DRM/licensing). They sold it like a hot potato only a year later after apparently changing corporate strategy, I suspect for legal reasons (we had large contracts with most rival manufacturers: Nokia/Sony Ericsson/LG/Samsung/etc.). They also bought the Beats brand in 2011, which IIRC has recently been acquired by Apple. For a nominally famously 'engineer run organization' HTC certainly seems to vacillate in its strategic development.
[0] http://media.corporate-ir.net/media_files/IROL/14/148697/Ann...
After Scott Croyle left their design work really suffered too, the M7 wiped the floor with what Apple were doing design-wise at the time.
The Samsung and LGs of the world make their own screens, storage, RAM, ... They can compete at the lower end on cost, and their vertical integration allows them profits to innovate at the top end. HTC has no expertise, either in a particular component, or in software.