Alphabet Inc (NASDAQ:GOOG) May Follow Apple (AAPL) In Custom Chip Strategy


Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) is reportedly working out a deal that could see future Android smartphones run on custom processors, the same way Apple Inc (NASDAQ:AAPL)’s iPhones do. With custom chips, However, it remains unclear how Alphabet will convince its hardware partners to abandon their existing chip strategies for custom Android processors.

It seems Alphabet Inc (NASDAQ:GOOG) is out to try to narrow the gap between smartphones that run its Android OS and those that run Apple’s iOS. In a move that could help Android bolster defense against iOS invasion, Alphabet is said to be engaging chipmakers to produce custom processors for Android phones. Apple has perfected the practice of designing chips that power its iPhones and iPads, and the strategy has worked well for the company with iOS devices cannibalizing Android market.

Improved device security

It is believed that Alphabet’s strategy of custom Android chips could make it easier for the company to bring device protection to the hardware level. Securing the chip is seen as a more effective way to ensure greater overall device protection.

With improved security, perhaps Android phones could become more competitive against iPhones, thus reclaim some lost market share.

Virtual/augmented reality

Producing custom chips for Android could also clear the way for Alphabet Inc (NASDAQ:GOOG) to accelerate implementation of virtual and augmented reality in Android phones.

Selling the custom chip idea

If indeed Alphabet Inc (NASDAQ:GOOG) is working to build custom processors Android devices, its Nexus line of smartphones could be the immediate beneficiary. However, it is uncertain as to whether Alphabet’s multiple hardware partners would readily agree to embrace custom chips against the strategy of self-sourcing chips that they have used over the years. What is not in doubt, though, is that if Alphabet pushes forward with the custom chip strategy, its partners may have no option but to follow suit lest they lose to competition.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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