Will Google's $1.1 billion gamble on Pixel pay off?

The tech giant has announced that it will pay $1.1 billion for the division at HTC that develops Google’s Pixel smartphones
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Google is banking on Pixel smartphones proving a success. The tech giant has announced that it will pay $1.1 billion for the division at HTC that develops Google’s Pixel smartphones.

Google will not be gaining any manufacturing assests from the transaction but the company will inherent 2,000 HTC employees who currently work on the site. The US company will also acquire a non-exclusive licence for HTC’s intellectual property.

Industry analysts have pointed to the deal as a sign of things to come from Google. Many believe it is a clear signal that Google wants to dethrone Apple as the major force within the smartphone arena. “Google has found it necessary to have its own hardware team to help bring innovations to Android devices, making them competitive versus the iPhone series,” said Mia Huang, analyst at research firm TrendForce.

Currently Pixel phones have less than 1 per cent of the global market share. However, the move follows Google’s push in recent times to invest in hardware. Last year the company hired Rick Osterloh, a former Motorola executive to run its hardware division.

The move is part of a broader and still nascent push into hardware that saw Google hire Rick Osterloh, a former Motorola executive, to run its hardware division last year. It also comes ahead of new product launches on Oct. 4 that are expected to include two Pixel phones and a Chromebook.

Pixel smartphones, only launched a year ago, have less than 1 per cent market share globally with an estimated 2.8 million shipments, according to research firm IDC. Yet despite the investment, many analysts don’t see this bet paying off.

“HTC is past its prime in terms of being a leading hardware design house, mainly because of how much it has had to scale back over the years because of declining revenues,” said Ryan Reith, an analyst at IDC. “Unless Google really wants to control hardware for its other businesses like Home and Chromebooks in addition to smartphones, then I don’t see this as being a bet that pays off.”

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