For Nexus One's Sake, Should Google Buy HTC?

Some have suggested that Google should buy a mobile network operator like T-Mobile but we think that following the launch of Nexus One, Google should instead acquire a mobile phone operator and more specifically its strategic partner, HTC.

The main reason why Google could be mulling such an acquisition would be to assert control over the whole process of building its ideal smartphone down to its very operating system. 

As it stands, Google needs another manufacturer, Taiwanese-based HTC, to manufacture the Nexus One, a process that is not without hiccups. 

Buying HTC would propel Google into the select universe of smartphone manufacturers as the search engine giant tries to catch up with Apple without the learning curve.

It would also remove one of Microsoft's most strategic partners; HTC produced 80 percent of the 50 million Windows-Mobile smartphones currently on the market.

Joining Google would be a winning combination for HTC; the company is already facing huge competition from Google itself and from other manufacturers. For 2009, net profits for HTC were down by 21 percent while revenue fell by only five percent to $4.54 billion.

This, analysts posit, is because HTC is spending a bigger chunk of its revenues on marketing expenses to differentiate itself from the scores of Android phones that are going to flood the market in 2010.

But there are some powerful arguments as well against such a purchase; first, there's the price. HTC is worth around $8.9 billion based on its market capitalisation which is not cheap for what is essentially "just" a phone manufacturer.

Then there's the fact that Open Handset Alliance members will be p*ss*d should Google buys HTC; expect them to leave en masse and never to partner with Google again. This would certainly make Google "don't be evil" worse than Microsoft.