So this week the big phone news was obviously the iPhone 8 hitting stores and everybody's Apple Watch Series 3 apparently forgetting how WiFi works the second you walk near it (there's a good WSJ piece on the LTE model dropping calls, if you want to feel smug about not preordering one). But the story I keep coming back to is smaller and, I think, more interesting: Google just paid HTC 1.1 billion dollars for a chunk of its own employees.
Not the company. Not the phones. Just people — roughly 2,000 of them, most of the engineering team that's been building the Pixel line under contract since 2016, plus a non-exclusive license to some of HTC's patents. HTC keeps its own-branded phone business (whatever's left of it), keeps the Vive, keeps the name on the door. Google gets the brains.
I've been sitting with this one for a couple days because it's such a weird shape for a deal. It's not an acquisition in any normal sense. It's Google basically saying "we don't want the factory, the retail relationships, the brand baggage, or the debt — we just want the fifteen or so years of smartphone-engineering muscle memory that happens to be sitting in a building in Taoyuan." And HTC, which has been losing money for something like six straight quarters at this point, said yes immediately. HTC stock jumped double digits in Taipei trading the day it was announced. Of course it did. A billion-plus dollars for people is basically free money when your actual phone business is bleeding out.
I'll admit a soft spot here I should probably disclose: my phone before this one was an HTC One M8, the aluminum unibody one from 2014, and it's still the best-built phone I've ever owned. Heavier than it needed to be, camera was mediocre (that "Ultrapixel" thing was a marketing bet that didn't pay off), but the thing felt like a machined object instead of a slab of glass you're renting until it cracks. HTC made the first commercially available Android phone ever, the G1, back in 2008. They were first with a lot of things and somehow never got credit for any of them, or the credit evaporated the second Samsung or Apple did the same thing a year later with better ads behind it.
What gets me about this deal is how much it rhymes with Google/Motorola, just run backwards. Google bought all of Motorola in 2012 for something like 12.5 billion, mostly for patents, kept it three-ish years, and sold the actual phone-making part to Lenovo in 2014 for a fraction of that. This time they skipped the part where you own a hardware company with unions and factories and warehouses full of unsold inventory, and went straight for the part that was actually valuable, which was always the people, not the plant. Somebody at Google clearly learned something from that first mess. I don't love what it means for anyone who isn't already inside a giant company's org chart, though: it's a pretty stark admission that owning a hardware brand isn't worth the trouble anymore unless you're Apple or Samsung, and everyone else is basically a talent farm waiting to get harvested by whoever's Android division needs headcount that quarter.
Also, and this is a small thing, but I like it: the deal explicitly does NOT include HTC's Vive business. Vive is genuinely good hardware, arguably still ahead of the original Oculus Rift on tracking, and it's the one part of HTC that isn't just limping along waiting for a buyer. It's kind of funny that the healthiest limb is the one Google didn't want.
Anyway. I've got a drawer in my desk with three dead HTC phones in it going back to 2011, batteries swollen, screens cracked, and I can't bring myself to throw any of them out. Not sure what that says about brand loyalty when the brand itself might not really exist in five years.