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Google's new smartphones

Nils Zimmermann
October 4, 2016

US search engine Google wants to challenge high-end consumer electronics giant Apple on its home turf. Google's new hardware division is set to make a splash with new Pixel smartphones and Daydream VR headsets.

USA San Francisco PK Google Sundar Pichai
Image: picture-alliance/AP Photo/E. Risberg

Tuesday, October 4, 2016, could go into the corporate history books as the day that Alphabet Inc.'s Google officially sounded the trumpets for a full-blown direct assault on the consumer electronics market. Google chief executive Sundar Pichai opened a special event in San Francisco with a prediction that artificial intelligence would play a greater role in our lives. He said computing was transitioning to an artificial-intelligence-first world, just as it moved to a mobile-first world a few years ago.

"Our goal is to build a personal Google for each and every user. We want to build a Google for each user," he said.

Google chose that day to reveal a suite of new consumer electronics hardware products, including its new high-end Pixel smarphone and Daydream virtual reality (VR) headset. Those products will directly challenge rival products from Apple, maker of the iPhone, and Facebook, whose Oculus VR division - obtained by takeover in 2014 - makes the market-leading Oculus Rift VR headset. 

Google's new Pixel smartphones will come in two sizes - five inches and 5.5 inches. The smaller one will cost about $650 (580 euros), with orders starting Tuesday, the larger version will go for about $750. They'll be equipped with Google's new voice-activated 'digital assistant,' and Google says the camera on Pixel phones will be "excellent." Pixel owners will also get unlimited storage of photos at full resolution. Others get unlimited storage at high resolution of up to 16 megapixels; and anything sharper than that gets reduced in quality to qualify. 

Google's new virtual-reality headset, called Daydream View, will differ from other headsets like Samsung's Gear VR in having a companion motion controller and compatibility with a wide range of phones, including Google's new Pixel phones. Daydream is a challenge to more sophisticated systems from Facebook's Oculus business, HTC and Sony - as well as to Google's own
Cardboard effort. Google says 50 partners are bringing apps and games to Daydream, with more on the way. Google services such as photos, YouTube and Street View maps will also come to Daydream.  

Another new Google gadget is the 'Home' device, which works with home entertainment systems and allows them to be controlled with voice commands. And the company is updating its Chromecast video-streaming device for watching Netflix and other online video on big screens. The new device, Chromecast Ultra, will support a higher-resolution format called 4K. 

And last but not least, Google wants to improve Wi-Fi in the home by creating its own router. The company says people use internet differently now, with games, video chatting and more on various devices throughout the home. The new Google Wi-Fi system will be modular - just add new components based on how your home and rooms are shaped. Software will help manage the various access points for you as you move around. 

Building anticipation

Google's new hardware marketing campaign has copied a page from Apple's playbook by building anticipation ahead of holding a big event in a California auditorium to unveil the company's latest products - complete with pre-unveiling secretiveness, plentiful speculation on blogs, and leaked pictures of soon-to-be-unveiled gadgets.

Google Nexus 5X
Google Nexus 5X. So last year... the Nexus line is set to be replaced by the new 'Pixel' line. Perhaps the new name is meant to point toward the new smartphone's unlimited photo uploading privileges. Image: picture-alliance/dpa/Google/Handout



Behind the scenes, Google's heightened interest in supplying consumer electronics hardware - not just software - is signalled by the fact that earlier this year, the company designated its hardware division chief, former Motorola corporation president Rick Osterloh, as a Senior Vice President (SVP) of Google corporation. That's a big deal, since Google only has a handful of SVPs, including for the Android, Ads, Search, and YouTube divisions - all of them core business units.

Pixel replaces Nexus

Google has offered its own smartphone to consumers since 2010, under the Nexus brand, but the gadget has gained little traction with consumers. Many people aren't even aware of the Nexus - perhaps because Nexus phones are typically unavailable in most mobile-phone network stores, where most people shop for smartphones.

Offering a smartphone of its own is a tricky business for Google, because the company is also the supplier of the Android operating system - the core software system used by more smartphone and tablet makers than any other, with an 82 percent market share in 2015.

The nearest rival is the proprietary Apple iOS operating system that runs on Apple smartphones and tablets, which had a 16 percent market share in 2015. There are other operating systems - for example, Microsoft's Windows 10 Mobile - but they're minor also-rans.

Taking aim at the high-end

Over the past few years, Google strategists have had to worry about upsetting smartphone and tablet makers to the point that they might abandon Android if they feel that Google is squeezing them by competing in their own markets.

Google Glass
Google Glass. Remember this thing? Just three years ago, it looked like it might unleash a big, big new wave in consumer electronics. But after it became apparent what massive invasions of privacy this gadget would enable, Google quietly shelved its plans to market it to consumers - at least for now. Image: picture-alliance/ZB

But Android has run on over 80 percent of smartphones and tablets since mid-2013, up from a mere 22 percent share of the operating system market as recently as 2010. Android OS runs on nearly all smartphones except Apple's iPhones, and so has clearly won the operating-system wars. Its overwhelming dominance appears to have given Google executives confidence that they no longer need worry too much about rival operating systems arising to challenge it, so they now can unabashedly promote their own hardware.

Nevertheless, Google seems to have decided to avoid upsetting other Android-using hardware makers too much - by attempting to avoid directly competing with them on price.

Most Android phones are significantly less expensive than Apple's very pricey iPhones. Google's new Pixel smartphone, by contrast, is set to be nearly as expensive as Apple's gadgets. So the Google consumer electronics division's strategy appears to be: Compete with Apple - which doesn't use Android - by selling expensive, high-end gadgets to consumers, and thereby avoid encroaching on the turf of low- and mid-priced Android phones made by other makers.