
Google is apparently ready to buy HTC - adventured
https://www.cnbc.com/2017/09/07/google-buying-htc-report-says.html
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bmcusick
This can't be about direct revenue. We all know that Android handset business
is barely profitable. Even Samsung makes a fraction of what Apple does, and
the rest are rounding errors.

I expect this is Google trying to prevent the Android market from becoming a
Samsung monopsony. They're half the market, and everyone else is less than 5%
(except Hauwei, which is 6%). Given the profits available, I bet half of these
businesses are in danger of being shut down every year.

Another thought is that Apple has a huge advantage in that they make really
low-level investments in hardware, especially the camera and security devices.
Google would probably be willing to make those investments and license them to
the other OEMs, but to really be good at it they'll need to be a hardware
company themselves.

Lastly, and I think this is less likely, it's just my inner fanboy talking,
but I hope Google makes really good phones and makes them Project Fi
exclusives. If they can create an anchor phone that draws people to Google Fi,
then Google has more leverage to negotiate lower prices from the wireless
companies. Anything that take Verizon down a couple pegs is OK by me.

~~~
bitmapbrother
>We all know that Android handset business is barely profitable. Even Samsung
makes a fraction of what Apple does, and the rest are rounding errors.

What a silly statement. Samsung's smartphone division reported profits of 3.6
Billion USD in their Q2 2017 financials. To claim that 3.6 Billion in 1
quarter is barely profitable is beyond ridiculous.

As for the second largest smartphone OEM - Huawei:

 _As we look at the overall revenue for Huawei during the first half of the
year [2017], the company was able to bring in $42.04 billion, at an operating
margin of 11%._

[https://www.xda-developers.com/huawei-releases-financial-
rep...](https://www.xda-developers.com/huawei-releases-financial-report-
for-h1-2017-sales-revenue-increases-36-2-yoy/)

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ulfw
They botched the Motorola acquisition and couldn’t find a way to integrate
them in their mobile efforts even though both were American companies (with
Moto having a significant presence right across from GOOG in the Valley). So
now doing it all over again, with a Taiwan-based company is going to work
better because...?

~~~
bryanlarsen
Because they've done it before, they'll have learned from their mistakes and
will attempt to avoid repeating them.

For example, they put in place a firewall to ensure that Motorola wouldn't
have any advantages over other Android manufacturers. I don't expect them to
do that again.

That being said, major acquisitions are hard and I expect it to fail once
again. But they'll mostly make different mistakes rather than the same ones
they made last time.

~~~
petra
Dropping the Android Firewall ? if Google does, would any future partners
trust it and collaborate with it ? and without that, many of Google's efforts,
including it's moonshot, will have much lower chance of sucsess. Would they
risk that ?

~~~
simonh
Where else would the Android handset makers go, Microsoft?

Actually that sounds good, we could do with a third viable handset OS, but
that's a digression and at this point a bit of a fantasy. They have nowhere
else to go.

Back in the early days of iOS and Android the consensus seemed to be that the
smartphone OSes were pretty much done. To compete with iOS all you had to do
was match it's features, or catch up, and once you had it was pretty much all
over. Since then Apple and Google have constantly found compelling new
features for the OSes almost every year. Apple is sinking billions into the
development of iOS, just look at what they're doing just in the area of
health[1], and there is clear blue water in terms of quality and features[2]
between it and Android, and that gap is increasing.

Google makes most of it's money in mobile off the iOS platform, yet is
investing hugely in Android development and making a pittance out of it. Not
only is that unsustainable, but if they really want to compete with Apple they
need to dramatically increase their investment in Android. They only way they
can justify doing that is to actually start making significant revenue off
Android. The only way to do that is to sell their own handsets, differentiate
them from competing Android handset vendors, command a decent profit margin
and grab significant market share.

[1] [https://www.cultofmac.com/316559/abc-news-goes-inside-
apples...](https://www.cultofmac.com/316559/abc-news-goes-inside-apples-top-
secret-health-lab/)

[2] Super robust and secure XPC; Superior power management; Custom development
tools, languages and hardware-software integration with things like Metal and
the motion co-processor; High quality health and fitness tracking; VRKit;
Highly consistent calibration of sensors between devices, vital for precision
applications like VR; All this is arguable in the details, sure, but the fact
that Apple is spending hugely on this backed by blockbuster revenues isn't and
Google can't realistically match that just for the heck of it. They need a
revenue stream to back it up.

~~~
bryanlarsen
Google has tens of billions a year in revenue from Android. Only in comparison
to Apple revenue or Google's advertising business can that be called a
pittance. :)

~~~
simonh
In a 2016 court filing it was revealed Google made $30bn on Android in the 8
years since 2008. Their annual revenue in 2016 was $89bn, of which 87% was
from search. Half of that is from mobile, but 90% of that comes from iOS so
Android search revenue is about $7bn. On top of that they make a few bn from
the Play store. So their total Android related revenue is probably about $10bn
a year.

So no, Google do not make tens of billions a year off Android. They may
possibly make a profit off of it of a few bn a year, but that's about the best
we can say. On the other hand they pay Apple $3bn a year just to be the
default search engine in Mobile Safari. That's how big the gulf is in the
mobile market between them and Apple. They make about 4x as much money off iOS
as they do off their own operating system. If I was running Google there's no
way I'd consider that acceptable, because all that iOS revenue is at Apple's
discretion.

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mathw
But would they actually stick with it this time?

Google need to decide what the heck their smartphone hardware strategy
actually is.

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maheart
I think this is Google shooting itself in the foot.

TechAltar on YouTube provides a very good explanation of why Samsung (and
probably other phone manufacturers) are cautious of Android[1]. This is
especially true when Google acts as a hardware phone manufacturer.

The summary of the argument (from memory) is that Google provides Android to
hardware phone manufacturers, and it doesn't compete with them in the hardware
space. Google owning Moto (and now HTC?), makes Google a direct competitor
with hardware phone manufacturers -- which you could argue are its main
customers in the phone market. Google can give Moto (HTC?) unfair advantages
because it owns/controls Android; even if it's not done maliciously (e.g.
having access to Android source before it becomes public).

[1]
[https://www.youtube.com/watch?v=2_L9j6mDJBg](https://www.youtube.com/watch?v=2_L9j6mDJBg)

~~~
lucozade
> I think this is Google shooting itself in the foot.

Only if it fails. I'm sure this is making Android phone manufacturers nervous
but what are their options? Essentially, Samsung would need to revive its
mobile OS platform and build a competing ecosystem. That's a huge gamble
that's already failed multiple times.

It strikes me that it's more likely that they'll take the same dichotomous
approach as they do with selling chips to Apple. My guess is that Google are
assuming the same.

------
cm2187
Would the other smartphone makers be happy that their OS be in control of a
direct competitor? I would assume the first thing Samsung would do is to
branch Android.

~~~
ocdtrekkie
Samsung didn't do anything about Google buying Motorola. And that was at a
time I'd argue Samsung was much less dominant in the market than it is now.
They don't have a whole lot to worry about.

~~~
flukus
Could be a coincidence, but they got serious about Tizen a few weeks
afterward.

~~~
aandrieiev
Right, but did it lead to taking Tizen to the level it could replace Android?
What I like about Samsung is that they do realize and accept that the software
is not their forte. Hence Android.

~~~
flukus
> What I like about Samsung is that they do realize and accept that the
> software is not their forte.

I may be out of date, but I hated the last samsung phone I had because they
did not realize this and subjected their users to touchwhizz.

The also need to improve at supporting their software and keeping android up
to date.

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boona
The more Google has been back pedaling on their unofficial motto "Don't Be
Evil", the more wary I become when they start acquiring companies. I like HTC
and I would like it to stay that way. I hope this merger doesn't happen.

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speedplane
Google should just stick with making their premium pixel product to showcase
their technology. HTC mostly makes low-margin, decent quality phones in a
large quantity. That doesn't seem interesting to Google.

~~~
wastedhours
> low-margin, decent quality phones in a large quantity

That's been interesting to HTC to now. Doesn't mean they can't make a premium
phone to showcase Google's tech, but just that their flagship attempts haven't
moved the needle compared to the incumbents (and more than likely fair to say
the Pixel hasn't either).

And, well... HTC was the contract manufacturer for the Pixel... so there's
that.

~~~
dawnerd
Doesn't htc make the vive too? Perhaps they want a bigger hand into vr?

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dis-sys
The only reasonable motivation would be the VR stuff, not really the
smartphone bits from HTC. I mean in 2017 who still buy/use HTC phones?

Let's be honest - the phone business of HTC is dead.

~~~
seunosewa
Google has good marketing and brand recognition while HTC makes great products
that they can't seem to sell. It could work.

~~~
dis-sys
HTC makes good products? why they stopped making "good" or "half good" phones?

They don't make good products, they were just lucky and had an early start in
the smartphone business.

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doe88
Lenovo must already be stashing money in the piggy bank.

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jpkeisala
Why do they want to buy HTC? Are there some significant patents they are
holding?

~~~
rajangdavis
Not 100% sure but maybe the Vive/VR tech?

~~~
ocdtrekkie
If this purchase happens, it will almost certainly not include Vive, from my
understanding. Reports today said mobile phone business only. And Vive is
being considered for selloff as a separate company.

~~~
ccozan
I'd say that Google is not interested in the phone business. After all, they
did have Motorola Mobility [1].

As other said, they are after the VR stuff, and any sale will contain that
bit. They will let phones run a bit, then either sell it at a bargain to other
manufacturer ( Lenovo? ) or let it slowly ( or abruptly) die.

[1] the other Motorola is doing just fine.
[https://www.motorolasolutions.com/](https://www.motorolasolutions.com/)

~~~
ocdtrekkie
But what you are saying is the complete opposite of what the rumor is. Since
its explicitly about their mobile phone business.

Also, note that now they have the Pixel instead of the Nexus line, which is
supposedly in house designed by currently isn't.

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bekman
Disaster in the making

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sabujp
had no idea pixel was made by htc!

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bitmapbrother
I don't see any financial upside to this rumor. What does Google gain from
buying a struggling smartphone OEM and inheriting all of the financial burdens
associated with it? In fact, this makes about as much sense as Apple buying
Foxconn just so that they can own the factories that make the iPhone. You
don't need to buy a smartphone factory to make smartphones in this day and
age. Design your smartphone and have Foxconn, Pegatron or LG build it for you.

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0xbear
Motorola #2, here we come. In and out in 2 years or less.

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return0
jesus, what's next? the army?

