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Google’s HTC move borrows from Apple’s playbook

Google’s HTC move borrows from Apple’s playbook

Google's US$1.1B acquisition of HTC’s smartphone arm is a recognition that to make top devices, you need control over hardware and software, like Apple

Tuong Nguyen, a Gartner principal research analyst, said that by marrying hardware and software, Google is likely hoping to bring some consistency to the Android user experience.

"They're trying to get some of that consistency reigned in, probably first and foremost," he said.

Nguyen agreed with Gillett and pointed to Google's Pixel smartphone as an example of a high-end, but limited release, device that was never meant to outcompete its Android partners.

"When you do that [compete against other leading vendors] you do a global release with multiple carriers and through carrier channels rather than the online market," Nguyen said.

At the same time, the high-end Android phone likely to result from re-engineering hardware would become a direct competitor to the leading producer of high-end Android phones: Samsung Electronics.

That, however, is less a concern for Google whose message to the Android market will be to compete for everything and for Samsung to take the new hardware head on. In that way, it mirrors how what Microsoft did to the Windows tablet market several years ago.

"Samsung lives in that premium space, so, in effect, this is a direct challenge to the Galaxy S and Note lines," Gillett said. "Now, the Samsung response will be that the deep engineering they've done with the Knox technology that builds security into the phone means they will have a stronger security play for enterprises – and I'm sure they'll argue they're better at security than the Google phone will be."

This is not Google's first foray into hardware. In 2011, it paid US$12.5 billion for Motorola with plans to make its own smartphone, but three years later it sold the handset maker to Lenovo for US$2.9 billion.

What Google discovered is that most handset makers don't make much profit on the hardware; and because it wasn't interested in investing more money into Motorola, it decided instead to simply keep the IP and hardware patents, Nguyen said.

"The Microsoft Surface, again similar to Google's Pixel, was not mean to outsell or compete with Asus or Dell or whomever," Nguyen said. "They were trying to promote the platform and show how it could make a nice, high-end device. They were saying, 'We want you to follow our lead.'"

Google and HTC already have a history of teaming up on handsets. HTC worked with Google to produce its first smartphone, the Pixel; the next version of the Pixel is expected to be announced 4 October.

Google's hardware play is also likely to extend beyond smartphones, with tighter hardware and software integration for its new Chromebook, expected to be called Google Pixelbook.

Google also makes the Chromecast streaming device and Google Home, a smart speaker, and it's enabling third-party speaker manufacturers to use its Google assistant on their devices.

"So again, what I think we're seeing is Google building up their capability because they recognise that the strategy Apple has pursued works in many hardware categories –  the deep integration of hardware and software," Gillett said. "Google is now seeking out a flagship position in multiple hardware markets to prove to the market and its partners that this is the vision; now, compete for the rest of the market and challenge us for the flagship position."

This article originally appeared in Computerworld (US)


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