TAIPEI – Google plans to present its first cheaper smartphone this year as part of aggressive hardware pressure, hoping to attract more users into its ecosystem, sources said.
The US Internet giant is moving fast to take advantage of the problems currently affecting Apple, which has suffered disappointing sales on its new premium iPhone, as consumers migrate to cheaper models and world smartphone sales are down.
The new Google smartphone will be its first non-premium model targeting price-sensitive customers and emerging markets. The price is expected to be lower than the cheapest Apple iPhone, XR, which starts at $ 749. The latest model of the Google Pixel launched last October starts at $ 799. Mid and high phones are sold at prices between $ 150 and $ 700, while low-end models are sold for less than $ 150, industrial sources said.
The new phone will be at the heart of Google's drive to expand hardware through its operating systems. The new products planned for this year include smart speakers, carry and webcams, sources familiar with the company's plans. Google plans to release a new premium phone in its Pixel range as usual.
In order to improve its hardware ambitions, the Internet giant gathers Apple's talent and expands its manufacturing partnerships in Asia. Over the past two years, Google has hired hundreds of hardware engineers and Apple supply chain specialists who are familiar with the issue. In 2017, the company also acquired 2,000 engineers from the Taiwanese smartphone manufacturer HTC.
Google has only a small presence on the global smartphone market. Pixel's shipments in 2018 are about 4.68 million units, or about 0.33% of the total market, according to IDC data. This compared to 3.45 million units, or 0.2% of the market in 2017.
Expansion of Google's hardware will allow the US technology giant to attract more users to its services, analysts say.
"Google … sees this as a more direct way of collecting user data and turning the leading software and Internet services into a larger and more integral part of people's daily lives," said Joey Yen, an analyst at IDC. "Google's hardware push will make it hard for people to live without Google's services and ecosystem … That's the big picture the internet giant always has in mind."
A person with direct knowledge told Nikkei that Google plans to launch a new security camera later this year after integrating the Nest Labs team, the technology startup acquired in 2014. Nest Labs builds cameras for home use, so such as 2015.
The company will also implement an updated version of its Google Home smartphone signature this year, as well as a new smartwatch to compete with Apple Watch, said the plan's acquaintance.
Google's range of intelligent speakers includes the standard Home option, the affordable Home Mini and the Home Hub released last October as a response to the Amazon Echo Show. Google's high-end Home Max is positioned against Apple HomePod.
Data shows that Google is quickly aligning itself with the Amazon market leader. Google provided 29.8% of the world market in July-September when it delivered about 5.9 million smart speakers, which is 187% more than a year ago, according to the Canalys consulting firm. That puts it just behind 31.9% on Amazon.
Meanwhile, suppliers expect Google's hardware ambitions to offset the difficulties they face as a result of Apple's problems. The world's largest electronics makers, including Foxconn and Pegatron's key installers and MacBook Quanta Computer maker, have been hit hard, as Apple is struggling with China's delay and the first drop in iPhone supplies.
Foxconn unit FIH Mobile, which manufactures Android phones, including Pixel, has increased production lines dedicated to Google products, one source said. The FIH Mobile team, which manages Google's business, gets even bigger bonuses than other Xiaomi-serving Android customers, due to the healthier growth prospects of the US company.
In the meantime, Pegatron has secured homebuilding orders since last year and has long-standing manufacturing relationships with Nest Labs. Quanta helps Google produce the bulk of intelligent home speaker products and serves as the main designer of data servers. Compal Electronics, an iPad maker, negotiates with Google to start making intelligent speakers.
Google is also more ready than Apple to transfer production outside of China to avoid the trade conflict between Washington and Beijing, sources said.
Recently, Phygareton has agreed to build a facility in northern Vietnam, which can accommodate 20,000 local workers primarily to produce Google products, according to people familiar with the matter.
Meanwhile, Quanta has expanded its plant in Taiwan's northern Taiwan city for a wide range of cloud computing products, including those from Google, sources said.
FIH, Pegatron and Quanta declined to comment.
Google has refused to comment on this story.
Apple was not immediately available for comment.
About 1,200 jobs listed on the Google Open Jobs page are hardware related on February 12th.