HTC's $35.5 million investment in Magnet Systems comes amid accusations of a spending spree, but the investment could help the company cash in on the BYOD trend.
HTC, the struggling Taiwan-based smartphone
maker, has invested $35.4 million into Magnet Systems, a Silicon Valley company
that builds platforms for next-generation enterprise applications, Reuters
reported Aug. 20. Specifically, the investment gives HTC a toehold in the
emerging market for bring-your-own-device (BYOD) technologies.
"The investment will bring social,
mobile and cloud capabilities to HTC's portfolio of service offerings to its
mobile enterprise customers," HTC told Reuters in a statement.
The announcement follows HTC's Aug. 20
admission that its investment in OnLine-a U.S. cloud-based gaming company that
sold its assets and fired half its employees Aug. 17-will result in a $40
reports that "analysts and investors have recently expressed doubts about
HTC's more than US$700 million buying spree since 2010 and are speculating that
more write-downs will follow," HTC wasn't the only company to find OnLine
intriguing. Warner Bros., AT&T, British Telecom, Autodesk and others also
invested in the company.
Still, HTC also invested $300 million in
Beats, whose audio technology it used to try and differentiate smartphones like
the HTC One X. Nearly a year after announcing the deal, however, HTC announced
plans to sell back half its shares in the company, leaving it with just a 25
percent ownership share, according to PC
HTC has made no secret of how challenging it
has found competing against Apple and Samsung. In April, CEO Peter Chou said
that, with the U.S. market the most difficult to claim a stake in, it would try
by leaning more heavily on the European and Asian markets.
China, now the world's largest phone market, has become a particular focus, and
"Among the international vendors, only
HTC managed an outstanding performance in mainland China," Canalys analyst
Jessica Kwee wrote in an Aug. 2 statement announcing second-quarter smartphone
"Its shipments grew 389 percent
year-on-year to reach 1.8 million units for the quarter," Kwee continued,
"noting the success was largely due to HTC's Desire V devices, which were
designed with the local China market in mind. HTC's success, said Kwee,
underscores the importance of tailoring offerings to local consumer
The investment in Magnet Systems will help
HTC-which has appealed more to consumers, as the Beats and OnLine investments
suggest-to better participate in the BYOD culture that has overtaken
enterprises. Whether or not companies help to subsidize the purchase of a device
or the fees associated with it, they're increasingly expected to secure it and
enable its participation in a user's work-life balance.
A May study by Research
found 65 percent of the enterprises that participated in the research
to have plans to adopt some form of BYOD policy by year's end, encouraged by
cost reductions and pressure from employees.
In June, Juniper Research reported that the
number of employee-owned smartphones and tablets used in enterprises today will
more than double by 2014, to 350 million devices
Whether buying the devices or not, Research
and Markets said in a statement, enterprises "must find ways to allow a
diverse range of products to access corporate networks and systems, such that
productivity is boosted without compromising security."