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Google’s Pixel smartphone should have Samsung worried, not Apple

Google's smartphones pose almost no threat to Apple, but they do signal a significant shift that should strike fear into the hearts of the companies most reliant on Android — particularly Samsung.
Google's Pixel is no threat to Apple, but it might be a problem for Samsung. (REUTERS/Beck Diefenbach)

Google wants everyone to think it is directly challenging Apple's iPhone with its new Pixel smartphones. At the unveiling of the two new flagship phones Tuesday, Google consistently mocked the iPhone, and it has even priced the Pixels the same as Apple's smartphones.

This led to numerous headlines proclaiming Google had finally produced a phone that could compete with the iPhone.

The thing is, Google's new smartphones pose almost no threat to Apple's smartphone business, but they do signal a significant shift in Google's approach to the market, one that should strike fear in the hearts of the companies most reliant on Android — particularly Samsung.

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"Google's relationship with [manufacturers] like Samsung has always been complicated, but today's announcements made it even more so, especially given that Google appears to be aiming both at the premium smartphone and VR headset spaces, which Samsung currently dominates when it comes to Android," Jan Dawson, chief analyst with Jackdaw Research said.

Apple has always retained a vice grip on every aspect of its smartphones, from design to manufacturing, building custom processors and creating software that runs only on Apple hardware. The approach has yielded one of the most profitable businesses ever, with a hugely loyal customer base willing to pay a premium to use Apple's iconic smartphone. Google now aims to copy this approach.

That won't be easy. While Google has made phones before — notably when it owned Motorola and through its Nexus program — it lacks an in-depth understanding of the supply chain, close ties to mobile phone networks across the globe, and other essential bricks for building a smartphone business.

That's why, in the short term at least, Google will have little impact on Apple's iPhone sales, particularly since it's not competing on price. Yes, Google has unique offerings like its AI-powered Assistant, unlimited storage for photos, and a seemingly really good camera, but none of these things will convince a significant slice of iPhone owners to switch allegiance. And even if they did want to switch, they could pick any of the really great Android smartphones on the market offeringcomparable experiences for under $400.

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Google does have deep pockets, though, and it has Android, a powerful combination that should have companies like Samsung and Huawei really worried.

Google says it's created a sort of Chinese wall within Google headquarters to prevent information about devices from its partners (like Samsung) from leaking into the Pixel phone division, now run by David Foster, a former IBM and Apple employee who most recently brought Amazon's Kindle to market.

Despite Google assertions that everything will continue as it's been, every smartphone manufacturer working with Google on Android has to be worried that the company that created the world's most popular operating system is now looking to take back complete control of it.

"Pixel smartphones represent the culmination of Google's ongoing moves to take ownership of Android," Ian Fogg, telecoms analyst with IHS Markit, said. "Launched initially as an almost entirely open-source operating system, Google has over time moved more and more apps and Android software elements into a proprietary Google license."

Samsung, Huawei, and nearly every other Android manufacturer out there takes a stock version of Android from Google, and then tweaks it by adding their own services and apps on top. This has led to the creation of dozens, if not hundreds, of flavors of the software, meaning an inconsistent experience across devices and manufacturers.

It also means updating the software is a nightmare, and while Google still maintains control of services like search, the Play stores, Gmail and Maps, it cannot enforce a consistent experience from the OS variations. No surprise it wants to take back control.

Microsoft made a similar move when it launched the Surface tablet in 2012. At the time, many commented that its partners would balk at the company licensing Windows getting into the hardware game. Crucially, Microsoft said it created Surface to give manufacturers a template to follow, as a way to show Windows at its best.

And it worked. The 2-in-1 market is the one bright spot in declining PC market today.

At Tuesday's launch of the Pixel, Google made no such concessions to the likes of Samsung or Huawei. This was a statement of intent from Google. This was a declaration of war.