Google Pixel Phones Target Apple, but May Hurt Samsung

Google’s product launch on Tuesday was as much a jab at Apple’s iPhone as a sales pitch for its new Pixel phones, with executives from the Mountain View internet search company taking shots at their competitor at every turn.

But any gains Google makes with the $649 (roughly Rs. 43,000) Pixel, billed as completely designed in-house, may come not at the expense of Apple, but phone manufacturers running its Android software, a list topped by Samsung.

“A premium Android strategy is really a strategy to take market share from Samsung,” said analyst Jan Dawson of Jackdaw Research. The South Korean company already is reeling from a highly publicized recall of its Galaxy Note 7 phones due to battery fires.

“Obviously Google doesn’t want to explicitly compete with its own partners, but this product is much more likely to compete with Samsung than Apple,” Dawson said.

Google Pixel Phones Target Apple, but May Hurt Samsung

Google, a unit of Alphabet Inc, clearly has its sights set on the iPhone and the luxury consumer base that it commands.

“There’s no unsightly camera bump,” hardware chief Rick Osterloh said to laughter from the audience at the phone’s debut, alluding to the iPhone’s raised camera, a feature lamented by some design aficionados.

Newly released ads for the Pixel phones land some blows on the iPhone. A rundown of the phones’ new features concludes with “3.5mm headphone jack satisfyingly not new,” a reference to Apple’s decision to eliminate the port in the iPhone 7, which riled many customers.

Imitation is flattery
Nevertheless, the Pixel line bears a strong resemblance to the iPhone, coming in two sizes and a variety of sleek finishes. The Google Assistant, powered by artificial intelligence software, is a response to Apple’s Siri. And as Google prioritizes making its own hardware under Osterloh, its emerging design philosophy echoes Apple’s.

Hardware executive Mario Queiroz touted the company’s attention to packaging, a feature that the late Apple CEO Steve Jobs famously obsessed over.

“You want the consumer first of all to have this great experience out of the box in terms of the design of the packaging,” Queiroz, a vice president of product management at Google, said in an interview.

He brushed aside concerns that Google’s hardware push will pit it against its Android partners. The technology embedded in the Pixel phone is meant to propel Android devices forward, he said.

“It’s not a zero sum game,” Queiroz said. “We believe that Google can and will be doing both things. Both delivering platforms and building our own products.”

Google could find itself squaring off against two extremely deep-pocketed rivals. Apple and Samsung are the largest smartphone handset makers and both have major marketing programs.

Samsung spent at least $50 million (roughly Rs. 332 crores) just on advertising during the Olympics in Rio de Janeiro, Brazil, according to estimates from Kantar Media.

Spokespeople for Apple and Samsung did not respond to requests for comment on Google’s launch.

Google Pixel Event: Android Maker Readies New Phones, Gadgets Featuring Its Software

Google may be getting serious about selling its own hardware gadgets.

On Tuesday, the search giant will ramp up its consumer electronics strategy with expected announcements of new gadgets including new smartphones and an Internet-connected personal-assistant for the home similar to Amazon’s Echo speaker. All are intended to showcase Google’s software and online services.

A new virtual reality headset and other devices, such as a home router, could also be on tap, according to analysts and industry blogs. Google has declined to confirm any specifics, although it previously described some of these products back in May.

Google makes most of its money from online software and digital ads. But it’s putting more emphasis on hardware as it faces rivals like Apple, Amazon and South Korea’s Samsung.

Google Pixel Event: Android Maker Readies New Phones, Gadgets Featuring Its Software

Hardware is hard
New devices could help Google keep its services front and center in the battle for consumers’ attention, said analyst Julie Ask at Forrester Research. Unlike a new mobile app or other software, she noted, it can be an expensive gamble to build and ship new hardware products. “But if you’re Google, you can’t afford to stop placing bets.”

Google already sells smartphones and tablets under the Nexus brand, which it launched in 2010 as a way to show off the best features of its Android software. But it’s spent relatively little effort to promote those devices, which have mostly ended up in the hands of Google purists. Tech blogs are reporting the company is now planning to launch two smartphone models under a new brand, Pixel, and Google has hinted it may invest in an extensive marketing campaign intended to introduce the phones to the mass market.

Android already powers the majority of smartphones sold around the world. But Samsung, the biggest maker of Android phones, has increasingly been adding more of its own software – even its own Samsung Pay mobile wallet – on the phones it sells. Another big rival, Apple, has built its own services, such as online maps and its own Siri personal assistant, to replace Google’s apps on the iPhone.

Home, but not alone
Google is also likely to begin selling a voice-activated “smart speaker” called Home, apparently modeled on Amazon’s Echo . Analysts are expecting Google will announce more details, including price and availability, at Tuesday’s event.

The “Home” device will feature Google’s digital “Assistant” service, a voice-activated personal butler that can search the Internet, play music or perform other useful tasks. “Assistant” is the company’s answer to similar concierge services from rivals, including Siri, Amazon’s Alexa and Microsoft’s Cortana. The leading tech companies are all competing to assist consumers in their online activities such as shopping, since that gives the companies a better chance of selling advertising or other services.

Home-based systems like the Echo are taking on more importance with the advent of improved voice technology, said Forrester’s Ask. “You can’t assume somebody is going to go sit down at a computer or pick up a phone and type in a question anymore,” she said.

Google may also provide a closer look Tuesday at some other products, including a new virtual-reality headset that it teased in May. Like the other devices, Google’s virtual reality system could be a platform for a wide range of games and applications that are built on Google’s software.

A Year of Alphabet: Great for Google, Less So for Moonshots

Reorganizing itself under the umbrella company Alphabet has done wonders for Google – but less so for a grab bag of eclectic projects ranging from robotic cars to internet-beaming balloons, which are suffering costly growing pains.

A year after Alphabet took shape, Google’s revenue growth has accelerated – an unusual development for a company of its size. That success, however, also underscores Alphabet’s dependence on the fickle business of placing digital ads in core Google products like search, Gmail and YouTube video. As a result, it remains vulnerable to swings in marketing budgets and stiffening competition from another equally ambitious rival, Facebook.

Alphabet was supposed to speed the process of turning offshoot businesses into new technological jackpots. CEO Larry Page predicted that separating these smaller “moonshots” from the massive search-and-advertising business would spur innovation by fostering a more entrepreneurial atmosphere.

That hasn’t happened during Alphabet’s first year.

A Year of Alphabet: Great for Google, Less So for Moonshots

Making the shift
Until Page and fellow Google co-founder Sergey Brin created Alphabet (which turns 1 on Sunday), investors complained that Google was spending too much on high-risk efforts. New Chief Financial Officer Ruth Porat, who joined Google in mid-2015, responded by reining in expenses to keep them more in line with revenue growth.

A few months later, Page announced the plan to draw a dividing line between Google and the far-flung forays Alphabet now refers to as “Other Bets.” The mishmash includes smart-thermostat maker Nest; the Fiber project, a high-speed Internet service; and X lab, where the company is building robotic cars and designing the stratospheric balloons designed to beam internet service to remote areas.

Other “Other Bets” include the biotech firm Verily and medical-research firm Calico, which has been studying ways to stop aging. Alphabet also runs funds investing in startups and mid-sized companies.

Page argued that fencing off Other Bets would make Google “even better through greater focus.”

Core successes
That part of Page’s vision appears to be panning out. After subtracting ad commissions, Alphabet’s second-quarter revenue jumped 22 percent from the previous year to $17.5 billion (roughly Rs. 1,16,396 crores). It was the best performance in four years, adjusted for changes in currency exchange rates, says RBC analyst Mark Mahaney. Alphabet shares rose 25 percent over the past year, easily outpacing major market indexes.

“Folks will be hard pressed to say that Alphabet hasn’t been a success,” S&P Global Market Intelligence analyst Scott Kessler says.

Alphabet Inc. declined to comment on its first-year performance. But Sundar Pichai, who became Google’s CEO in the restructuring, told investors in July, “There is an amazing energy right now.”

Among other things, Google has been making strides in the still-nascent field of artificial intelligence, hoping to create more convenient services that attract even more eyeballs for its advertisers.

Stalled bets
But the demand for financial discipline and accountability appears to have taken a toll on Other Bets, which lose billions of dollars a year. Key leaders have defected from Alphabet’s high-profile self-driving car project and its Nest line of internet-connected devices. Alphabet also has scaled back plans to expand its Fiber service to dozens of US cities.

Creating a holding company also was supposed to make it easier to diversify through major acquisitions. But Alphabet’s biggest deal so far has been the $625 million purchase of a business software maker, Apigee Corp., which had annual revenue of just $92 million.

Alphabet could make a much bigger splash if buys Twitter, as recent reports say it is considering. Twitter would give Alphabet a popular publishing outlet to monitor trends, mine data and sell even more ads. Alphabet declined to discuss whether it’s mulling a bid, which would be expensive; Twitter might fetch between $20 and $30 billion, despite its problems with user growth and online harassment.

Looking beyond
Google is doing so well that investors aren’t fixating on the losses with Other Bets, Kessler says.

Only three Bets – Nest, Fiber and Verily – are generating even a smidgen of revenue. In nine months, the Other Bets companies have lost a combined $2.6 billion on revenue of $410 million. Another big loss is expected in the July-September quarter; the company reports results on Oct. 27.

BGC analyst Colin Gillis still sees the gamble as prudent and expects at least one of the projects will come up with a breakthrough that lessens Alphabet’s dependence on Google.

Optimism is fine as Google keeps growing at a robust rate. But Wall Street will likely ratchet up the pressure if the company falters and nothing emerges from Other Bets to help pick up the slack.