Is HTC quietly building a cloud empire? Buys stake in SyncTV

htc-rezound-review-back-beats-audio-logoOnce is a fluke. Twice is a coincidence. But three times — that’s a pattern — at least when it comes to HTC. The Taiwanese handset maker has been snatching up cloud service and content distribution channels with gusto, recently acquiring music streaming service MOG, if by proxy (Beats Audio actually purchased MOG, but HTC is the majority stakeholder in Beats Audio, having invested $300 million in the company).

And last year, HTC partnered with Dropbox to offer 5GB of free storage to Android users running its Sense UI 3.5, just as rumors were swirling about the imminent release of Apple’s iCloud — a move that many saw as a preemptive cloud-storage strike.

Now HTC has purchased a 20% stake in SyncTV, “a cloud-based video service that delivers video over the Internet to a broad set of devices, including Android, Windows Phone, XBOX, iOS and Internet-enabled televisions,” according to a press release. The deal was announced Monday, along with a broad licensing agreement with SyncTV parent company, Intertrust — a company best known for its DRM software, already used by Samsung and Motorola. Although the two companies call the agreement a “strategic technology partnership,” a clear pattern is emerging as HTC positions itself to be a major competitor in cloud-based services.

Ambition beyond phones

The seedlings of HTC’s cloud-push were its tandem $48.5 million dollar buyout of Saffron Digital, which laid the groundwork for its Watch video streaming service — and its $40 million dollar stake in OnLive, the innovative cloud-based gaming company. Presumably, HTC’s SyncTV interest will now further bolster its video distribution ambitions.

And the agreement with DRM maker Intertrust will allow HTC access to all of that company’s Marlin DRM technology — because how else is HTC expected to get content providers to sign up?

As we reported earlier today, HTC also announced the termination of its backup service, a solution which allowed users to store contacts, messages, location footprints, and call history on HTC’s cloud — and  to sync that data with their devices. The company simply offered the explanation that “new and improved services” would be forthcoming. Although bone-headed from a PR perspective — nothing like a company imploring you to trust it with your valuable data only to promptly disregard that trust once it develops something new — it is yet further indication that HTC may be planning on coalescing its separate offerings around a unified cloud service.

A hard road ahead

HTC has historically been a disruptive mobile force: An early adopter of Android, it has continued to develop its own Sense user interface to distinguish its phones, and it follows that the company will further attempt to differentiate itself by offering its own branded services — a lucrative, though difficult, business. With earnings down 50 percent over the last year, and profits falling 26 percent in the last quarter of 2011 alone, HTC is likely eager to diversify from its relatively low-margin hardware. What’s particularly interesting about the SyncTV deal, however, is the service’s presence in a broad range of non-mobile platforms, including Xbox and internet-TV, perhaps paving the way for future HTC products beyond phones.

By offering music streaming, video on demand, gaming, and now the allusion to an iCloud-like contacts and messaging sync, an HTC cloud service would be positioned in direct competition with many aspects of Google’s Play marketplace, of which its Android platform shares. We imagine, however, that HTC is using Apple as the real role-model here. A unified ecosystem, from hardware to software to the web, would be much more in line with HTC’s lifestyle-brand aspirations. The worst thing HTC can do now is simply add another feather to its cap of half-implemented and disperate cloud services — it’s going to take more than that to brighten the company’s future prospects.


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