Alphabet's Google has struck a $1.1bn (£822m) deal with Taiwan's HTC to expand its smartphone business. Google will not take a stake in the firm, but some HTC staff will join the Silicon Valley giant. The Taiwanese company was once a major player in the smartphone market but has struggled to compete with the likes of Apple and Samsung. Google expects the deal to close by early 2018, provided it gets the all clear from regulators. Shares in HTC were suspended in Taiwan on Thursday ahead of the announcement.

Betting on hardware

Under the deal, Google will acquire a team of people who develop Pixel smartphones for the US company and receive a non-exclusive license for HTC's intellectual property. "It's still early days for Google's hardware business," the firm's senior vice-president of hardware Rick Osterloh said in a blog post on Google's website. The deal builds on an existing partnership between the two tech companies. "These future fellow Googlers are amazing folks we've already been working with closely on the Pixel smartphone line," Mr Osterloh said.

Deal benefits

In 2011 Alphabet, then named Google, bought Motorola's Mobility for $12.5bn, only to sell it on three years later. Geoff Blaber from CCS Insight said while the HTC deal might "raise eyebrows" given Google's history with Motorola, it will give the firm valuable design and engineering resources. "The far bigger risk for Google would be to stand by and do nothing as hardware becomes an all-important means to an end for its core business," Mr Blaber said. But the big winner is HTC. "It's a much needed investment as HTC struggles to maintain its smartphone business and grow its early start in virtual reality," he added.

Courtesy:BBC