First rumored a while ago, and now finally made official – Google is agreeing to give HTC $1.1 billion dollars to acquire the talent from HTC behind both last years and the current years Pixel devices.  The initial chatter had indicated that Google might just straight up buy all of HTC, but that isn’t the case here.  What happened?

There is a ton of speculation going on around this financial transaction, but the current thinking has this going in one of a couple different ways.  First, it could be that Google didn’t want or need all of the other business units that would have come with the full acquisition of HTC, and simply decided that buying the talent that they were already using anyway for much, much cheaper made more sense.

Some of the thinking is also along the lines of a long term purchase, where Google buys up what they need immediately (the Pixel team) now, and then delays their buyout of some of the other parts of HTC they would like to have (corporate facilities, manufacturing contracts, etc…) at a later time for either financial or other business reasons.  Considering that the initial cost of acquiring Motorola back in 2012 was over $12 billion dollars, spending just 1 billion seems like a bargain in comparison.  And not to be overlooked in this equation is the fact that Google will get a “non-exclusive license for HTC intellectual property” – what amounts to some innovation and other technology (like squeezing your phone!) that can and has been licensed to other companies as part of a way that HTC can generate other profits.  Google now has access to those patents but doesn’t have to pay any more than they already did for them.

quote from Rich Osterloh, SVP Hardware at Google

There is a line of thinking that part of this longer term acquisition strategy could be that Google doesn’t want to alienate any of their other existing hardware partners, like LG.  The upcoming October 4th launch of the Pixel devices (one of which has been made by LG) would look a bit like egg on LGs face if Google had this announcement in partnership with LG but then basically said “it wasn’t good enough so we had to buy HTC to make it better.”   Not in those words exactly, but you get the point.  This delayed gratification approach would make more sense, allow LG to have their moment in the sun with the Pixel 2 XL (a horrible name btw) and then at some point down the road Google could finish buying HTC and no ones feelings get hurt.  We will know in time which of these is correct, but for now, Google picked up over 2,000 new employees and is still a very, very rich company.

You can find the link here to the full blog release from Google