Report: Google to scrap Nexus device program in favor of 'Android Silver'

Google (NASDAQ: GOOG) plans to scrap its four-year-old Nexus Android device program in favor of a program called "Android Silver" aimed at delivering high-end smartphones attuned to Google's specifications to better compete with Apple's (NASDAQ: AAPL) iPhones in the premium smartphone segment, according to a report from The Information.

The report, which cited unnamed sources briefed on the project, said that Android Silver devices are expected to be launched in markets such as the U.S., Germany and Japan as soon as next year, and that Google also is thinking of releasing them in emerging markets such as Brazil and India. In the U.S., the report said, Google has been looking to partner with Sprint (NYSE: S) and T-Mobile US (NYSE:TMUS) on the phones. The search giant is also looking to partner with Telefónica, Telstra in Australia and SoftBank in Japan, among others. Rumors of Silver first surfaced this month on the blog Android Police.

The Silver phones would "sharply limit" the number of non-Google apps that can be pre-installed on devices, the report said, or would allow users to uninstall pre-installed apps. A major difference between the Silver program and the Nexus program, the report added, is that Silver will focus on in-store sales through wireless carriers and others as opposed to the strategy for Nexus devices, which have mainly been sold online. Google will also apparently help cover part of the cost of the Silver phones, though the payments to the company's partners wouldn't be direct. Instead, the report said, Google could potentially pump hundreds of millions of dollars and maybe as much as $1 billion into promoting Silver devices through ad campaigns and special kiosks in wireless stores staffed by Google-trained employees.

LG Electronics, which made the last two Nexus smartphones, as well as Motorola Mobility, which Google is selling to Lenovo for $2.91 billion, are prime candidates to participate in the program. The last two Nexus phones, the Nexus 4 and 5, have been strong sellers for LG. Samsung Electronics, Sony and HTC are unlikely to participate early on in the program, the report noted, largely because they already have their own high-end phones and are banking on customized services and user interfaces to set themselves apart.

One major reason for the shift appears to be that Google wants to fight back against the perception that it does not create premium phones, especially compared to Apple. The majority of Android phones are sold in emerging markets, which has helped make Android the largest smartphone platform in the world.

Additionally, the report said that Android chief Sundar Pichai has been more willing than his predecessor, Andy Rubin, to let other executives at Google have influence over Android. For example, Nikesh Arora, Google's chief business officer, now has more influence because Android's business-development executives, including partnerships chief John Lagerling, report to him.

Finally, the report said the Silver program could be a way to counter the influence of Samsung, the largest Android OEM in the market and the world's largest smartphone maker by volume. Samsung has been pushing its own services on its Galaxy line of devices, both for content and functions like language translation. Additionally, Samsung has stepped up its direct courtship of developers, urging them to develop apps specifically for Samsung phones. The vendor held its first developer conference last fall.

However, tensions between Google and Samsung, if they existed, have apparently been simmering. In January the companies announced a wide-ranging patent-licensing deal that covers the companies' existing patent portfolios and all patents they will each file over the next 10 years. Further, according to Re/code, which cited unnamed sources, after pressure from Google Samsung agreed to modify its user interface for future devices and highlight Google's suite of apps for movies, music and other content at the expense of its own in-house-developed software. Google also has agreed to take over defense of some of the patent-infringement claims made by Apple against Samsung in Apple's current patent lawsuit, as well as to indemnify Samsung if it were to lose on those claims, according to Re/code.

For more:
- see this The Information article (sub. req.)
- see this The Verge article
- see this TechCrunch article

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