Alphabet Sets the Stage for a New Showdown With Apple

By Chris

Image source: Google.

It's becoming increasingly clear that tech companies are no longer satisfied to outsource their hardware while they just focus on the software. Years ago, Apple started designing its own processors for its mobile devices, hiring companies for the manufacturing only. Microsoft has started to follow in Apple's footsteps lately by making its own Surface tablets and phones.

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Apple keeps a tight leash on its iPhone software and hardware -- and who can contest the results? Apple's phones make up 92% of all smartphone profit worldwide.

Now Alphabet's Google is looking plunge further into the mobile hardware space, according to a new articlefrom The Information. The site reports that Google is considering designing, manufacturing and marketing its own smartphone. The news comes just after separate reports that Google is also looking into designing its own mobile processors.

Doesn't Google already do this?Some people may be confused about the news, because Google already has its Nexus lineup, which are essentially Google-Influenced smartphones and tablets. But LG and Huawei are in charge of most of the design and manufacture of those devices.

Image source: Google.

Google does, in fact, have its own hardware in the form of Chromebook Pixel computer and the upcoming Pixel-C Tablet. But if Google began making its own smartphones, it would mark a major shift away from relying on the device makers -- namely, Samsung-- to get its Android operating system out to the masses.

It's possible Google is worried that Samsung is losing its influence in the smartphone space. In the quarter ending in September, Samsung was able to pull itself out of profit declines, but in the seven consecutive quarters before that the company posted profit declines. Most of that drop came from lagging smartphone shipments, and while things are starting to get better for the company, it's likely Google took notice.

Taking more controlGoogle has continually taken steps to assert more control over Android over the past few years, as it's put more restrictions on what device makers can add to Android, but building its own smartphones would clearly take this to an entirely new level.

Google currently has far less influence over Android than Apple does over iOS. When Apple wants to fix, update, or change its software, it simply does it. But Google has for years been confined to working with device makers and wireless carriers to post fixes, with varying results. Older and less expensive Android devices don't get updated as quickly, and are typically less secure as a result.

If Google were in charge of the entire hardware and software system, the company could update Android devices just like Apple updates its devices, thereby improving a user's experience with the software.

Google, the smartphone vendorWhile Android still holds about 71% worldwide smartphone operating system market share, Google is likely looking beyond market share to a goal of complete Android influence.

I doubt Google expects to skyrocket to the lead among device makers if it ends up releasing its own smartphone. But it could be a long-term play to secure its control over its Android platform, especially as the company expands its reach into wearables, autonomous cars, smart homes, and more. As this happens, Google likely wants to ensure that these systems will be secure, updated regularly, and play nicely with each other. And if it can earn some additional hardware revenue at the same time, even better.

The article Alphabet Sets the Stage for a New Showdown With Apple originally appeared on

Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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