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Alphabet Inc (GOOG) Plans Major Venture to Develop Android Chips

Alphabet Inc (NASDAQ:GOOG)

Alphabet Inc segment Google plans to team up with hardware partners in order to develop a series of Android chips. The venture aims to standardize the Android operating system and place it in steady competition with the likes of Apple and other leading rivals. But industry experts say the chances of Google succeeding at this are slim.

Alphabet Inc (NASDAQ:GOOG)

Google aims to instill more of its own expertise and standards into the Android sphere. The online giant has conveyed its interest in co-creating Android chips with other leading firms in hardware. Similar to the iPhone’s Ax chip, the idea is page taken out of Apple’s playbook. A majority of Apple device components are built in-house.

If successful, the venture will allow Google to design and produce hardware that would rely entirely on homegrown tech. The firm could incorporate a lot of specific and varying qualities into its devices. This would also allow Google to keep its software in par leading advancements in the industry. An idea like this is about control and flexibility. And since Google is taking a DIY approach, it could rid itself of a lot unwanted third-party concerns.

A;phabet May Not Succeed

Professionals in the chip industry, however, say that the chances of Google pulling this off are a long shot. Finding a willing co-developer capable of producing chips that can power high-end devices will be very tough. The company could work with lower tech firms, but resources and expertise would be lacking. Start-ups and lower end tech firm may not be enough to give Google what it wants.

“The top vendors, such as Qualcomm and MediaTek, are likely to value their own technology over IP developed by others,” says The Information’s Amir Efrati. This is because chip-making giants would not likely want to place any sort of dependence on a large third party like Alphabet . It would also be a poor move financially. Chip developers make a lot of money off licensing their own tech. Plus, Google would quickly become a formidable rival pushing tech identical to theirs.

“Profit margins of Android handset brands are already severely pressured,” says Afrati, “so that could be a tough sell less-powerful chips are good enough.”

So Google is likely to make a lot of compromises in order to make producing a series of its own chips worth while.

Google Revives Low-cost Android

Alphabet  is having another go at low-cost smartphones. A year ago, the search giant launched the Android One in India. Chief Exec Sundar Pichai intended on breaking through into the emerging market in the region. The idea is said to be a failure.

The company succeeded at making a $100 dollar device, capable of running its latest Android 6.0 Marshmellow. But the product couldn’t manage rake in the firm’s “next billion users”. This was due to a number of factors.

“Google started with online-only sales for three months, which angered local retailers,” said Ron Amadeo, an Android Specialist. “This also cut Android One off from customers, since most phones in India are sold in small shops. Google’s control over the program angered OEMs, who would rather pick from a large variety of components and vendors to  maximize profit.”

This time around, the search giant is going to be more lax. OEMs will have more of a say in pricing and features. In hopes of breathing life into the Android One program, Google  and Lava International Ltd a are expected to release a new low-cost device within the coming months.

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