Google late Wednesday announced that it would pay $1.1 billion (roughly Rs. 7,159 crores) for employees from HTC’s smartphone unit, prompting waves upon waves of speculation about what might come next from this hookup.
But I have one hope: that Google’s clout and HTC’s design can give us something to challenge Appleand Samsung.
Now, let me be clear. I’m not against either Apple or Samsung – they both make nice phones. I’m also not saying there aren’t other smartphone companies out there, because there obviously are. But while there are firms doing interesting things – Essential, LG, even Google’s former acquisition Motorola – it definitely feels like this is Apple and Samsung’s market and we’re all just living in it.
Having more players is also good for innovation. “Two is better than one. But three is better than two,” said Patrick Moorhead, principal analyst at Moor Insights.
Yes, it’s true that both Apple and Samsung face pressure globally from smartphone makers, particularly in China, where cheaper smartphones from companies such as Huawei are getting better. But it’s still hard not to say Apple and Samsung are at the top when, combined, they make up 74 percent of the US smartphone market, according to comScore, as well as 94 percent of the global industry’s profits, according to Strategy Analytics.
Many have tried and failed to at least become a viable third player for the smartphone world. Microsoftand Nokia hooked up and, for a time, put out interesting phones that ultimately didn’t capture consumers’ hearts. Google’s acquisition of Motorola was a clear attempt to take on the iPhone and Samsung. And even HTC looked like it had a shot at becoming a viable third player, with unique phone designs and high quality that actually made its phones stand out from a fairly boring pack of black (or silver) slabs.
But, of course, it was not meant to be. HTC was just not big enough, and after trying to shore up sales by moving into the growing market of low-end smartphones, it lost some of its sheen on the high-end.
Google has also failed to make a major dent in the market for hardware in general. It does well enough with its own phones – first the Nexus, now the Pixel – but they aren’t a main focus for the company and haven’t broken beyond a more limited market of Android enthusiasts. Google’s move into hardware with its Nest acquisition has been successful in some ways, but also fraught with insider drama. There have been more recent successes, such as the Chromecast and the Google Home, but they are still more the exception than the rule.
An optimist could look at this partnership, which puts thousands of HTC’s engineers under the supervision of Google’s hardware heavyweight Rick Osterloh, and say that bringing these firms together will allow them to focus on a product and iterate quickly. With Google’s checkbook and the keys to the Android operating system, there is potential for an Apple-like unification of hardware and software design.
A pessimist could say that there’s no reason to think that these companies, which have already been working together on Pixel, will be able to pull off a goal neither have accomplished individually.
To succeed at cracking Apple and Samsung’s grip would require a shift in Google’s priorities as a company – and we’ve had some signs of this, but we’ve also been down this road before. As Richard Windsor of Edison Investment Research said in a Thursday note to investors, Google’s “hardware acquisitions feel like unwanted orphans that have no business being part of Google. Google has yet to show any sign that it has learned from the mistakes, but better late than never.”