It began with simply contracting them to manufacture the smartphones they designed and developed. Now the partnership between internet giant Google and Taiwanese consumer electronics brand HTC enters a brave new era, to the tune of $1.1 billion. That is the value of the deal worked out between the two companies wherein Google just acquired a substantial majority of HTC’s smartphone engineering division. At first glance, it would seem that the developer of the Android mobile operating system was simply to get more experts in trying to make their Pixel phones a more serious competition for Apple’s iPhone line.

But Google is going for more. They are setting up to become hardware manufacturers themselves.

Challenging the iPhone

Google seems to be preparing to face Apple as a full-on rival where smartphone manufacturing is concerned. While they had been farming out the actual making of Google-branded Android mobile devices to companies like HTC before, this time the internet giant is gearing to play hardware hardball. Their burgeoning in-house hardware division, formed in 2016 with former Motorola head Rick Osterloh at its head, will be getting a lot of smartphone manufacturing muscle from the HTC engineers that Google is paying $1.1 billion for.

Osterloh described the incoming “future Googlers” as veterans of HTC’s time producing the Pixel smartphone line.

In addition to their joining Google’s hardware division, the deal will also allow for a non-exclusive license to intellectual property from HTC (such as the phone squeeze function). The Taiwanese company will not be devastated in human resources by the acquisition either, according to HTC chief financial officer Peter Shen.

They will still retain around 2,000 research and development engineers for their smartphone designs, down from the original number of 4,000. Framed in that way the acquisition by Google is more focused on talent rather can company resources.

The world after smartphones

But there is also a far-reaching vision that has gone into the bolstering by Google of its hardware team with veterans from HTC.

Advancement of the Android-using Pixel 2 phones is one thing, but the company is also making contingencies for a possible post-smartphone future. Just as mp3 players and iPods gave way to the more general-purpose smartphone, so too does the smartphone appear to be on the verge of giving way to smart home speakers and wearable gadgets.

Apple is pushing its new augmented reality development kit, and Microsoft is putting serious development into their HoloLens tech. Google, therefore, wants to be able to buff up its existing Glass and Home devices for that contingency, with the help of the HTC folks. But that is still ways off, so for now having the people to design an anti-iPhone Google gadget is the first step for tomorrow.