HTC has agreed to transfer its XR development team to Google for US$250 million, including non-exclusive licensing of its XR patents. This strategic move has sparked varied reactions across the industry, prompting DIGITIMES to investigate key market concerns.
Understanding the 2017 precedent
In 2017, HTC transferred nearly 2,000 R&D staff to Google for US$1.1 billion. The recent XR R&D team transfer has raised questions about whether this mirrors the earlier move, particularly regarding potential impacts on R&D capabilities.
However, the current situation differs significantly from 2017. When HTC transferred its mobile R&D team to Google, the smartphone market had matured considerably, making it difficult for brands like HTC and Sony to maintain profitability while competing against Samsung and Apple in the premium segment and Chinese manufacturers in the mid-to-low-end market.
Since then, HTC has strategically redirected its focus from mobile R&D to emerging technologies including augmented reality (AR), virtual reality (VR), AI, blockchain, and 5G. This shift acknowledges the growing potential of AR and VR technologies in communication, office applications, entertainment, and social networking, positioning them as successors to smartphone technology.
Unlike the 2017 Powered by HTC division sale, which appeared as a survival strategy, the current agreement comes amid an emerging XR industry. The partnership emphasizes strategic cooperation and joint market expansion rather than mere asset transfer.
HTC has indicated that completing this agreement with Google will enhance the Android XR platform, accelerate AR/VR headset and glasses development, and support its operational growth.
Assessing R&D impact
While the transfer of XR R&D personnel to Google raises concerns about future development capabilities, the impact appears less severe than the 2017 mobile R&D team transfer. This is partly because AR/VR/XR headset development involves less complex design and development processes compared to mobile devices.
HTC currently employs over 400 R&D staff in AR/VR/XR, representing a significant shift from its previous mobile-focused team. The company has evolved from primarily hardware sales to ecosystem management and system integration, reducing concerns about personnel transfer.
Moreover, the non-exclusive nature of the patent licensing in this transaction allows HTC to continue expanding its hardware business.
Strategic positioning
HTC maintains strong foundations in the AR/VR/XR industry, with established platforms, investments, and operations across various sectors. Beyond hardware sales, the company has invested in 5G ORAN, blockchain, and AI technologies. The Google transaction positions HTC to streamline its product portfolio and concentrate on platform development, potentially improving operational efficiency and financial flexibility.
The company has indicated that future collaborations with Google remain possible, potentially including hardware production under a dual-brand model alongside joint platform and application development. Google's increased presence in the XR field is expected to contribute positively to HTC's business growth.