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Home>UPDATE: Why Google's HTC deal may be different than the Motorola bomb

UPDATE: Why Google's HTC deal may be different than the Motorola bomb

UPDATE: Why Google's HTC deal may be different than the Motorola bomb

09/24/2017

By Therese Poletti, MarketWatch

Alphabet can apply lessons from past in $1.1 billion deal with Pixel partner, unlikely to face anger from other Android manufacturers

Alphabet Inc.'s $1.1 billion deal to buy of part of HTC's smartphone assets is giving some investors stress-filled flashbacks of its controversial $12.5 billion purchase of Motorola Mobility in 2012, (http://www.marketwatch.com/story/google-to-buy-motorola-mobility-for-125-billion-2011-08-15-1013140) but Google's latest foray into hardware feels different.

(http://www.marketwatch.com/story/google-to-buy-motorola-mobility-for-125-billion-2011-08-15-1013140)The deal, announced late Wednesday night (http://www.marketwatch.com/story/google-htc-sign-11-billion-cooperation-agreement-2017-09-20), received a lukewarm reception Thursday on Wall Street, with Alphabet (GOOGL) (GOOGL) shares closing with a 0.1% uptick as the S&P 500 index declined 0.3% and the Nasdaq Composite Index declined 0.5%.

That response should be expected given the history of the Motorola acquisition. The deal ended with a fizzle in 2014, when Google sold that business to Lenovo of China for $2.91 billion, (http://www.marketwatch.com/story/google-to-sell-motorola-to-lenovo-for-29-bln-2014-01-29) a massive loss that at least led to some tax benefits. But the real impetus behind the Motorola deal was to beef up Google's patent portfolio (http://www.marketwatch.com/story/googles-motorola-gambit-clouded-by-apple-2012-08-27) amid a series of patent fights in the smartphone arena.

The HTC deal seeks instead to shore up Alphabet's actual hardware business with 2,000 HTC engineers, many of whom the company already knows from partnerships devoted to creating flagship Android-based phones, namely the Pixel line that Google launched last year. The Motorola partnership was new at the onset at a time when Google did not really have a hardware business, and Google kept Motorola Mobility separate.

A blog post by Rick Osterloh, Google's senior vice president of hardware (https://blog.google/topics/hardware/google-signs-agreement-htc-continuing-our-big-bet-hardware/), suggested the approach this time will be very different, as he referred to the HTC team as "future Googlers."

"These future fellow Googlers are amazing folks we've already been working with closely on the Pixel smartphone line, and we're excited to see what we can do together as one team," Osterloh wrote.

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