Google and Apple have been rivals in the mobile operating system market since the inception of superphones. Partnering with manufacturers and allowing them to customize their version of Android seemed to be the prevailing strategy for Google with the exception of the Nexus program. In order to set a benchmark on how Google sees the future of Android, it used to be that once a year Google would partner with a manufacturer to release a phone which was running “Vanilla Android”. No customizations nor bloatware, just a clean build of Android. Partnering manufacturers would change, some even releasing phones in several consecutive years, but the they would be solely responsible for the hardware, while Google would provide the software.
Things started to change in 2015 though. Google released the Pixel C, a unique tablet that was made entirely by Google. No known hardware manufacturer was advertised and it seemed to show that Google had a different plan for the Nexus program. As this device was made entirely by Google, the company took an approach similar to Apple, where they designed and developed the hardware and the software to run together for the best possible user experience.
This year, Google launched their own phone, Wi-Fi router, virtual reality headset and home assistant. All of these devices are #madebygoogle incorporating both software and hardware in order to provide a seamless experience for end users. Suddenly, they became a hardware company.
This causes a significant disruption for all their partners who are currently selling mobile devices that run on Android. Pixel, Pixel XL and Pixel C represent the Google vision of Android, hardware and software. They are no longer solely partnering with manufacturers; they are also actively competing with them.
As the #madebygoogle products are priced at a premium, there should be less competition in terms of the majority of the Android market, but this does not mean that users who used to favor other high-end handsets will rely on the offerings of partners. There will be Android purists who will purchase hardware made only by Google as relying on partners means, slower updates, limited feature sets, and sometimes even restricted access to bleeding edge features, such as Google Assistant which is currently exclusive to the Pixel and the Allo app.
References:
https://madeby.google.com/
http://www.theverge.com/2016/10/5/13167230/walt-mossberg-google-pixel-phone-industry-shake-up
http://www.theverge.com/a/google-pixel-phone-new-hardware-interview-2016
http://mashable.com/2016/10/06/google-assistant-not-in-android-nougat-7-1/
Google’s new smartphones are about Google, not Android
Everyone is talking about Google finally competing with Apple. This seems to be the case at first sight, as they are deliberately mocking the iPhone in their introduction video (https://www.youtube.com/watch?v=Rykmwn0SMWU). But it seems very unlikely that iPhone users will switch from iPhone (iOS) to Google Pixel (Android) as it’s not competing on price. (The iPhone 7 cost as much as the Pixel, and the iPhone 7 Plus costs as much as the Pixel XL (for every memory size; 32GB, 128GB, and 256GB).
The one who should worry, however is Samsung. With their recent Note7 disaster (3 ‘fixed’ phones exploded again over the recent days). And sloppy updates, they might lose their high end customers to Google. Google’s relationship with manufacturers like Samsung has always been complicated. But now Google appears to be aiming both at the premium smartphone and VR headset spaces, which Samsung currently dominates. Google has been seeking to take back control of android, as it is excluding more and more apps from the Android Open Source Project (AOSP), and rereleases them as closed source proprietary apps. The Google Pixel will be the first phone (and only phone for now) featuring the full Google Assistant. It is also the only Android phone getting monthly security patches directly from Google and that is always running the latest android version. (currently <0.1% of the phones is running Android 7 or 7.1 Nougat, compared with iOS 10 which is already at 48% just weeks after release (http://bgr.com/2016/09/28/ios-10-vs-ios-9-apple-iphone-ipad/ / http://www.gadgetdetail.com/android-version-market-share-distribution/). Fragmentation has always been a huge issue for Google and Android (27% is still running on version 4.4 Kitkat from 3 years ago (2013), while only <3.5% are running iOS 8 (2014) or lower), and the Pixel tries to fix that.