Alphabet Inc (GOOGL) Google Android One Partners With Xiaomi

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Alphabet Inc's (NASDAQ: GOOGL ) Google tried to lock down the massive Indian smartphone market three years ago with its Android One smartphone program. Android One would offer cheap smartphones running the latest version of Android, keeping Apple Inc. (NASDAQ: AAPL ) out while avoiding the chaos of Android fragmentation.

Alphabet Inc (GOOGL) Google Android One Partners with Xiaomi

Source: Xiaomi

That didn't work out as planned. Now Google is taking another crack at it, partnering with Xiaomi to offer the Chinese company's mid-range Mi A1 as the new Android One flagship.

With 4G networks aggressively rolling out across the country, only 50% of cell phone users converted to smartphones and a population of 1.32 billion, India represents a huge opportunity.

Get them hooked on Google services and those kind of numbers could have a material impact on GOOGL stock.

Android One: Hook Markets Like India on Google Services

Android One is Google's effort to ensure its operating system dominates the Indian (and emerging) smartphone market.

The idea of the program - which launched three years ago - was to offer cheap smartphones running stock Android, with regular system updates. The goal was to get as many users as possible to convert from cell phones to smartphones, and to ensure those new users were running the latest version of Android. With hundreds of millions of new users coming on stream, it was important to GOOGL to make certain they would be using Google Search, Google Play and other revenue-generating Google services.

Having Android One partners offer Android devices that received official updates reduced the degree of fragmentation - a problem Google has been trying to tame for years . It ensured buyers had direct access to the latest Google services, instead of having third-party equivalents added in by smartphone manufacturers.

The problem was, those Android One smartphones were too cheap . Indian consumers may not have had Western levels of disposable income, but many wanted something better than the $100 smartphones Google's partners were offering. And there was heavy competition at the bottom, with Indian smartphones and cheap Android devices undercutting even those Android One offerings. So Google was missing out at the bottom and in the growing midrange.

As a result, Android One stumbled in India, and in other emerging markets including the Middle East and Africa.

Android One Goes Upmarket

The Indian market is going increasingly upscale and Chinese smartphone makers now account for over half of sales. Thus, Google decided to take another crack at Android One.

This time, it's joining forces with China's Xiaomi. With a 17% share of Indian smartphone sales last quarter, it is the most popular Chinese smartphone maker in that market and second in overall sales only to Samsung Electronics .

The new Android One flagship smartphone will be Xiaomi's Mi A1 , starting at 14,999 rupees (that's about $234).

The Mi A1 is a very capable smartphone, with a 5.5-inch Full HD display, premium metal body and an octa-core Snapdragon 625 CPU with 4GB of RAM. It also sports a dual camera system similar to the iPhone 7 Plus - at about one-quarter the price of the Apple smartphone in India. It includes Google Assistant, unlimited Google Photos storage and it will get Android Oreo by the end of the year - plus two years of Android updates.

That's a big step up from those initial $100 Android One smartphones.

Alphabet hopes going upscale with the Xiaomi Mi A1 will provide a much-needed boost to its Android One program. The new smartphone should help keep the iPhone out while ensuring smartphone buyers have access to the latest Google services. With hundreds of millions of new users coming online in India and other emerging markets, every Google search, app purchase from Google Play and video watched on YouTube contributes revenue that drives GOOGL stock, while adding to Android's overall global dominance.

Eventually, those Android smartphone owners might also buy additional hardware. And with an Android smartphone in hand, odds are they'll skip the Apple TV and, Inc. (NASDAQ: AMZN ) Amazon Echo, buying a Chromecast or Google Home smart speaker instead.

You can see why Google is not about to give up on Android One.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securitie s.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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