HTC pivots in direction of enterprise investments after being burned by consumer tech

20 Aug 2012

Taiwan-based smartphone maker HTC has had to writedown a US$40m from its investment in cloud gaming firm OnLive, just weeks after it decided to sell back 25pc of its stake in Beats audio to its founders.

HTC blamed a restructuring effort by OnLive for the failure of the investment that should have propelled it into the cloud gaming arena. “Due to lack of operating cash and an inability to raise new capital, OnLive had completed asset restructuring over the weekend. HTC estimates that it will need to recognize a US$40 million provision for this investment loss.”

However, while smarting from these investments in the consumer tech arena, HTC’s decision to make a US$35.4m investment in a Silicon Valley enterprise software firm called Magnet Systems suggests it sees an opportunity to fill the vacuum caused by the slow demise of BlackBerry-maker RIM.

Perhaps HTC realises how crowded and unpredictable the consumer smartphone market can be and intends to refocus its effort on the corporate market.

Enterprise pedigree

HTC today announced a US$35.4 million strategic investment for a 17.10pc stake in Magnet Systems, Inc. (Magnet), the creator of a next-generation enterprise platform that accelerates the development and delivery of mobile enterprise applications. “The investment will bring social, mobile, and cloud capabilities to HTC’s portfolio of service offerings to its mobile enterprise customers,” HTC said. “The Magnet team has extensive experience in platform development for the enterprise market.”

Whatever HTC is up to, Magnet Systems may have the pedigree to succeed in a cloud enterprise play involving smartpones. Its CEO Alred Chuang co-founded and served as CEO of enterprise software firm BEA Systems which was bought by Oracle in 2008.

As HTC points out itself: “BEA created many of the most renowned platform technology brands in the enterprise market, and was the driving force behind some of the most influential enterprise standards.

“The leading-edge social, mobile and cloud technologies at the heart of Magnet’s platform make it an ideal foundation for the applications and services that enterprises will be buying and building in the coming years,”  HTC said.

Could it be that HTC’s bad run of luck on investments is about to pivot in a more fortunate direction?

Heck, maybe HTC might think of buying RIM? Just a thought.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years