What does the new Google partnership mean for HTC?
With the official announcement that HTC will be getting a $1.1 billion cash influx from Google, you may be wondering how things are going to play out for our friends at HTC. We don’t claim to have any insider knowledge in regards to HTC’s future roadmap, but the details that were unveiled in part of the agreement to share some light on what may be ahead for HTC.
R&D team cut in half
In the HTC/Google deal, an unspecified number of HTC employees will be working for Google, once regulatory authorities give the final signoff in early 2018. Some reports claim that half of HTC’s 4,000 R&D employees will be included in the count. While the development of Google’s Pixel phones has been a huge priority for HTC over the past two years, it’s highly unlikely that half of HTC’s R&D team was involved in their development. If the report proves accurate, Google is likely acquiring a larger number employees based on their growth projections for the Pixel.
Smaller product portfolio
So where does that leave HTC? If HTC’s R&D team is cut in half, you can expect HTC’s product portfolio to be cut in half as well. This could mean that HTC’s Desire phones are officially dead since HTC has already confirmed that it would be focusing its efforts on high-margin products. The HTC U11 is the perfect example of what HTC will likely be focusing its efforts on, but it will be hard for the company to compete with Samsung, LG and Apple with such a limited product portfolio. We could see HTC branch out with phones like the rumored Ocean Life which is expected to be an Android One phone, but HTC would only have success if the device is sold at a very attractive price point.
On the other side of the scale, losing 2,000 or more employees to Google means that HTC’s bottom line gets pushed down significantly. Since it no longer has to worry about compensation for those employees, HTC will be able to turn a profit sometime in 2018.
What to do with all that money?
The final piece in this deal in the huge mountain of cash HTC has to play with. You might be wondering why Google valued the deal with HTC at $1.1 billion. Well, we took a look at the numbers and found that the figure covers the $1.096 billion in losses HTC sustained over its past nine successive quarters in the red. We’re sure HTC has a few bills that need to be paid, but $1.1 billion should be more than enough money to keep the lights on for at least a few more years.
The cash influx should also help HTC reestablish a successful marketing plan for the company and its products. We’re hoping that no one at HTC thinks bringing back RDJ is a good idea. If HTC can allocate $50 million toward marketing a year, we’ll definitely see an uptick in consumer demand for HTC’s products.
We should know a lot more tomorrow. Feel free to share your thoughts on the Google/HTC partnership in the comments.