According to a report, Google is hoping to gain more control over its Nexus smartphone lineup by following a business model set out by Apple’s iPhone.
For those of you who didn’t know, though Nexus phones are currently marketed under the Google name, the hardware is designed by partners such as LG and Huawei. In exchange for manufacturing the devices, the two companies get to place their branding on the device as well. According to The Information, several key influencers within Google are looking to treat hardware makers similarly to how Apple treats iPhone suppliers. The CEO of Alphabet, Sundar Pichai, is hitning that future Nexus devices may only have Google’s name on them. This information is causing some dismay at HTC, which is currently in the running for manufacturing the 2016 Nexus device. In this particular scenario, though financially it woul dbe a great opportunity for HTC, losing out on branding the device could harm brand recognition.
Aside from just adjusting the branding on the device itself, Google is pursuing other tactics similar to that of Apple as well such as boosting their marketing budgets for the device. The Nexus device in the past has typically been treated as a showcase device, one that highlights what Android software and hardware is capable of doing with a growing budget, despite the Nexus 6P and 5X not meeting Google’s optimistic goals. Google is said to keep roughly 15% of the revenue that comes from sales of the Nexus phone and handle online sales in the devcies’ top 10 markets. This is largely expected as hardware manufacturers are bound to shift most marketing duties over to Google due to the line’s low profit margins.
There are talks of Google possibly even shifting its design in-house since it’s already micromanaging several hardware details pertaining to the device. The idea of this is one that would presumably solve a long-running fear that Apple would limit its ability to generate money from iOS users. For those of you who didn’t know, despite Android being the world’s most popular smartphone platform, most of Google’s mobile revenue comes from ads and services that target Apple product owners (ironic right?).
There will likely be several obstacles that Google would have to face and get past to execute a plan such as this one but it is a possibility. We’ll have to wait and see what Google ends up doing but this may result in Apple seeing increased competition or at the very least a bigger threat.
[Via The Information]