Evgeny Tchebotarev

@tchebotarev

Google’s Long Path To Becoming #2.

September 23rd 2017

Just a couple of days before Google announced that nearly 2,000 engineers of HTC mobile division are joining Google (not Alphabet), I wrote a short post on why I’m bullish on Apple. In essence, Apple’s key differentiator is in creating custom chips, whereas Android competitors have to work with off the shelf components and find differentiation in gimmicks, such as titanium frames or assistant buttons.

Now that 2,000 HTC engineers are joining Google, I thought about what it means to the ecosystem.

Clearly, Google understand exactly what I wrote, and they understood it early enough to first start working on Pixel — which was Google’s closest touch on smartphone hardware yet, and now, on the verge of Pixel 2 announcement, the company will show stronger than ever that it is committed to bringing hardware and software together.

While Pixel 2 likely to not have any custom silicon inside, Google has posted numerous jobs for SoC (system on a chip) engineers, and hired Apple chip architect (just as Apple has been beefing up its team and hired top Qualcomm engineer).

Where Apple excels is in experience building those chips. Compared to off the shelf Qualcomm processors, Apple has so far designed 17 (!) generations of custom SoC for iPhone and iPad, not counting 7 SoC powering Apple Watch, TouchID, and headphones. To catch up with this level of expert knowledge, Google will require to switch the whole team to a total overdrive for the next 24 months be on par.

By the time Pixel 3 or Pixel 4 start rolls around, we might start seeing custom chips for specialized applications (Machine-Learning-on-a-chip or a dedicated GPU unit for A/R rendering) being soldered onto new line of phones, making it possible, for the first time, to build truly differentiated hardware.

As it comes to Google, they consistently failed to make in-roads with the broader public — Pixel phones are for tech enthusiasts in the way they are marketed and sold. However, I can see a hypothetical scenario where Google decides to mimic Apple strategy, and goes to dominate the Android market.

To do so in the developed world, Google will open retail stores in premium locations, mimicking Apple Store, and will go on to create a line up of phones — 2 or 3 models to target low and high end of premium segment. Luckily, there are enough hardware products at Google to have retail presence. Couple this with hiring new ad agency, massive advertising, and inevitable cloud perks — like unlimited email, photo storage, and maybe even coupling that with Google Fi (along with simplified non-nerd pricing), and in 2–3 generations Google’s hardware can easily become #3 or even #2 in the North America. With just 8% of the US commerce done online, it’s the only way for Google to play on the same field as Apple.

Now, to the emerging markets, like India, Indonesia, or even China — that’s a whole different story. Very few makers understand the forces at play, be it Google or Apple, and while they do try — which is most evident by India-made India-priced iPhone SE or Google’s venture with Android One, most local makers are Chinese that spend a lot, act fast, and innovate at 10–6 speed, compared to 9–5 to their North American counterparts.

Evgeny Tchebotarev is a founder of 12-million-photographers-strong community 500px, backed by Andreessen Horowitz; and currently helps other companies unlock 10x potential. He is usually based in Taipei, Taiwan.

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