Google and HTC have been linked with takeover rumors for some time now, but these intensified over recent weeks. After a brief halt in trading yesterday, Google and HTC have today announced a new strategic investment scheme.

It’s not the acquisition many of us were expecting, but this is big news, and will likely affect many of us going forward. Under the terms, Google is paying HTC $1.1 billion (cash) in exchange for several of HTC’s engineers, many of whom are described as “already working with Google to develop Pixel smartphones.” These engineers will be joined by a separate non-exclusive license for HTC’s intellectual property. In other words, we were right about Google betting big on the future of their hardware division. The search giant has agreed to pay HTC very handsomely for the best of what the current Android smartphone industry has to offer. This agreement is described as “a testament to the decade-long strategic relationship between HTC and Google around the development of premium smartphones.” It’ll be interesting to see how it pans out for both companies.

Rick Osterloh, Senior Vice President of Hardware at Google, highlights a number of industry firsts resulting from a collaboration between HTC and Google. The two have worked on many projects in the past, including many successful ones like the HTC Dream and T-Mobile G1, the first consumer Android device, the first Nexus handset (the Nexus One), the Nexus 9, and last year’s Google Pixel smartphones. Google is adopting several HTC engineers to pull them into its own “Made By Google” team, something to underpin its medium and long-term hardware goals. It’s particularly telling that Google picked HTC: we’ve already seen rumors that the second generation Google Pixel smartphones will be manufactured by the Taiwanese company, and incorporate their latest feature of a squeezable chassis design.

The deal is expected to close next year, and will not impact HTC’s VIVE virtual reality business. Going forward, HTC is planning to continue to release a small number of smartphones, presumably still using the HTC Sense user interface, with HTC’s former engineers now producing Google-branded products. However, given that Google will be given the license to access HTC’s intellectual property, we can expect further HTC innovations propagating into Google’s product line up. This means a lot for the future of Pixel, as Google is finally taking hardware, and not just software, with all seriousness by essentially paying HTC for employees and know-how.

For fans of HTC, who have been hearing about continued struggles over several quarters, this news is good: HTC will continue as a freestanding business, with an incentive to keep coming up with great ideas for smartphones. For fans of Google, getting access to former HTC technology is also good news.

SOURCE [Google Keyword] [HTC]