Google intends to follow a business model laid out by Apple in hopes of exerting more control over its Nexus smartphone line, according to a report released on Monday. Google’s Nexus devices, which run on its Android OS, are currently marketed under Google’s name, but the hardware designing is handled by partners such as LG and Huawei. In return, they get to place their branding on the devices.
HTC may not agree
The Information states that people within Google want to treat hardware makers just like Apple treats iPhone suppliers. The company’s CEO, Sundar Pichai, has hinted that the upcoming Nexus devices have only Google’s name on them. The idea is reportedly not being liked at HTC, which is in talks for a possible 2016 Nexus device. No doubt HTC will make money from a new Nexus deal, but losing branding can hurt name recognition.
Google is said to retain about 15% of revenue generated from Nexus phone sales and handles online sales of the device in the top 10 markets. The profit margins are deliberately low, and therefore, hardware makers are already shifting most marketing duties over to the search giant.
Google may bring design in-house
Meanwhile, Google is pursuing some tactics which we have already seen Apple use, such as trying to boost Nexus marketing budgets. The Nexus phones have been treated just as showcase devices to illustrate the potential of Android software and hardware, but the marketing budgets of these devices have been growing.
Google is already reportedly micromanaging hardware details, therefore, it could bring phone design in-house. This will help the company in overcoming the long-running fear that “Apple might one day limit its ability to generate money from iOS user,” says Apple Insider. Though Google’s Android is the most popular smartphone platform in the world, it makes the majority of its mobile revenue from ads and services “targeting Apple product owners.”
On Monday, Alphabet shares closed up 1.24% at $770.77. Year to date, the stock is down by almost 1%, while in the last year, it is up by over 43%. The stock has a 52-week high of $798.69 and a 52-week low of $518.18. In premarket trading today, Alphabet’s shares were trading up.