Google deal adds phone knowhow

$1.1B deal with HTC helps search gi­ant chase Ap­ple.

Austin American-Statesman - - METRO & STATE - By Shelly Banjo and Mark Ber­gen Bloomberg

Google of­fi­cially closed its $1.1 bil­lion deal with HTC Corp., adding more than 2,000 smart­phone spe­cial­ists in Taiwan to help the search gi­ant chase Ap­ple Inc. in the cut­throat premium-hand­set mar­ket.

The deal will help Google wade deeper into de­sign­ing its own con­sumer hard­ware and spe­cial-pur­pose chips — like Ap­ple. Google’s most re­cent Pixel model came with a new im­age processor to im­prove the de­vice’s cam­era. More of this “cus­tom sil­i­con” will come in fu­ture Pixel de­vices, Google’s hard­ware chief Rick Oster­loh said.

Oster­loh brought in HTC en­gi­neers and de­sign­ers to help Google con­trol more of the de­sign and pro­duc­tion of its prod­ucts, in­clud­ing work­ing more closely with sup­pli­ers.

Google pre­vi­ously fo­cused on soft­ware and let man­u­fac­tur­ers in­clud­ing Sam­sung Elec­tron­ics and HTC han­dle the hard­ware. But mod­ern phones of­fer fea­tures like aug­mented re­al­ity and ar­ti­fi­cial in­tel­li­gence-based ser­vices that re­quire close in­te­gra­tion of soft­ware and hard­ware.

“You have to be ver­ti­cal in some cases to re­ally push the en­ve­lope for con­sumers,” Oster­loh said. “Our in­ten­tion is to in­vest in this for the long term. You’ll see a steady in­crease in in­vest­ment from us.”

A big­ger step would be to cre­ate its own “sys­te­mon-a-chip” — the main pro­ces­sors in­side phones that Ap­ple now in­serts into its de­vices. Qual­comm Inc. pro­vides the bulk of these chips to An­droid phone mak­ers, and Oster­loh said Google will keep work­ing with the sup­plier for the fore­see­able fu­ture.

Still, by de­sign­ing more sil­i­con it­self, Google could cut busi­ness for other sup­pli­ers.

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