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Alphabet Inc (GOOG) Setting up Possible Google Nexus Smartphone Push

Google (GOOG) Nexus Phone

Alphabet Inc has never appeared to be a serious player in the hardware space.  We’ve seen Glass and Chromebook, and we hear news about Google cars and a few other things so we know the company sees potential in hardware.  So far, Alphabet has been in the business of making money from ads. In fact, every product that it has unveiled was designed to help the company produce ad revenues. Alphabet seems ready to change all that as rumors emerge that Google wants to build its own smartphone.

Google (GOOG) Nexus Phone

The Information reports that Google has started to mull over the idea of entering the smartphone hardware business by making its own phones. Google owns the Nexus line of smartphones but the firm doesn’t build the phones itself. Rather, the firm works with other OEMs such as Huawei and LG to build its phones.

Google might enter the smartphone space

Alphabet might start to add smartphones to its scanty (but growing) line-up of hardware products in the short to medium terms. If Google goes ahead to build its smartphones (it should) it would bring some sanity to the Android OS by providing a benchmark against which other OEMs can rate their devices. More so, the firm would be able to better control the “purity” of its phones and it would even find it easier to try new features on the devices.

Apple has been able to succeed in with its iPhones because the firm has  complete control starting from the design stage to when they are delivered to buyers. The success of Apple’s plan is evident in the fact that it takes 92% of profits in the smartphone space while its sells about 10% of the devices in the market.

However, Google would be creating new problems as it solves some of the problems that have crippled the Android OS. To start with, the firm would become a direct rival to the OEMs that helped push the Android OS when it starts making its own phones. It remains to be seen if Google would handicap itself to avoid killing off its rivals or if it would come to dominate the Android space while pushing smaller OEMs out of the market.

How exactly does Nexus help Google

Two months ago, Google announced the release of two new Nexus phones – the Nexus 6P and Nexus 5X. When the phones were unveiled, the tech space was trying to understand why Google makes the Nexus line of phones.

To start with, the smartphones don’t usually record spectacular sales and Google doesn’t seem to be doing a serious job at marketing them. In Q1, the firm reported a 2% y-o-y decline in its “others” segment because “Year over year it hasn’t been as strong given the strength of the Nexus 7 last year.”

It was posited that Google was making the Nexus line of phones because it wants to show people what the Android is capable of doing. The Nexus line of smartphones is designed to run pure/stock Android as opposed to other android phones run on “tainted” android with third-party apps that often compete with some Google apps. However, some people opined that Alphabet won’t be able push the strong points of Android OS to the tech space until it makes and sells the Nexus in the same way that Apple makes and sells its iPhones.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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