Question

Why did Google enter to the smart phone industry? How do Google compete with rivals?

Google developed Android OS for smart phones. Google has provided the open software to the manufacturers. But, Google developed the high-end smart phone (Google Pixel) in 2016. Although Google has introduced the cheap reference phone (Google Nexus) with partner manufaturers (LG, Huawei), Google was not a major player in the smart phone industry.

What do you think of Google's Pixel? Why Google enter into the industry as a manufacturer even thought the industry is highly competitive and less attractive? Any thoughts about the future direction of Google's strategy? (Write 2 paragraphs)

Answer 1

It is a very obvious question to ask. Well, to explain this move, let use start with Google’s smartphone business model. Google owns Android operating system (OS), and distributes it under an open-source license. It lets the developers to customise the OS and allows the device manufacturers to install it on their devices for free. The use of Android on mobile devices grew rapidly since its launch, it was the primary OS for around 83% of smartphones. According to Google there were 1 billion monthly users of Android as of June 2014. By offering its Android platform and apps to manufacturers free of charge, Google maximises use of its own mobile apps and thereby maximises revenue from its mobile-advertising business.

But the most important thing that Google lacks is the control of entire device. Let us compare Android to Apple’s mobile operating system, iOS. Apple retains full control over every aspect of its devices, from hardware to software. Apple devices come pre-installed exclusively with Apple’s own apps, all developed by in-house Cupertino. Google, on the other hand, has to make a deal with manufacturers to ensure that Android devices come pre-installed with its apps. To do so, Google forces manufacturers that want to install popular Google apps (such as the Google Play store) to also install an entire suite of Google’s apps called Google Mobile Services. So if a smartphone manufacturer wants to pre-install YouTube on his Android device, he must also pre-install entire set of google apps. But this also doesn't ensure a full control of Google since manufacturers remain free to pre-install other rival apps (like Skype). That said, Google does routinely offer financial incentives to manufacturers that pre-install Google’s apps exclusively. One might wonder that what is the future of Android as a free, open-source OS when Google its self competes directly with its main beneficiaries.