Google (GOOGL) is expected to unveil two new Nexus smartphones, its new mobile operating system and the next generation of its Chromecast streaming device at an event in San Francisco on Tuesday.
Analysts will be watching closely, but not
just for product updates: The event marks Sundar Pichai's first presentation as
CEO and investors will be looking for signals of a change in direction for
Google's business.
"It will be interesting to see if
Pichai talks about any topics other than products. Will he discuss business or
organizational goals for Google? [We] will be looking for signs of how active
or distinct of a CEO he will be," said RBC Capital Markets analyst Mark
Mahaney.
Pichai is expected to unveil Google's new
flagship Nexus phones from LG and Huawei. The Nexus 6P is Huawei's first Nexus
device and, according to Android Police, will be available for pre-order on
Tuesday in the U.S., U.K., Ireland, Canada and Japan starting at $499.99 and
the device features a metal body, Gorilla Glass 4, a Qualcomm Snapdragon 810 v
2.1 processor and 3450mAh battery.
The Nexus line provides Google with the
opportunity to show off the features of its new Android software. Most device
makers and carriers customize Android, but Nexus phones run an unchanged
version, allowing Google to showcase its vision for the new OS dubbed
"Android Marshmallow."
The two new Nexus phones Pichai is
expected roll out are an important part of Google's pitch to developers to get
them to build apps on the platform. According to Comscore, Android has 51
percent of the US smartphone market share and an even greater share of the pie
outside the U.S., where Apple's iOS devices are less popular.
Android Marshmallow, first unveiled in
May, includes some key new features to rival Apple's (AAPL) iOS 9 and is
expected to be released in early October.
Android Pay a rival to Apple Pay lets
users pay for products using an Android phone, and virtual assistant Google Now
gets an upgrade with Now On Tap, which let users access the service by holding
down the home button, just like Apple's Siri. The new feature also incorporates
information Google knows about users, such as location data and data from
gmail, to suggest useful information.
Pacific Crest analyst Evan Wilson said
that the fragmentation of Android limits its impact in the short term. Only 21
percent of Android smartphones are currently running Google's latest Android
OS, Lollipop, according to the Google Play store.
Still, Android has "closed the
functionality gap with [Apple's] iOS at high end and is now a true competitor,"
Wilson said an important step since Android phones are generally seen as
targeted to more price-conscious users.
Google is also expected to announce the
second generation of Chromecast stick with home screen support for streaming
video and improved Wi-Fi capabilities, and a new Chromecast audio stick for
streaming music. Android Police reports that Google will also announce a Play
Music family plan for $15 per month for up to 6 devices, rivaling similar
offerings from Spotify and Apple. It's all part of Google's effort to get more
devices using Google's platform.
With Android facing probes in Europe and
reportedly in the U.S. over antitrust claims, first reported by Bloomberg,
Google is under increased scrutiny from regulators, though analysts are split
on how much of a threat these investigations pose to Google's business.
"For now, we are assuming that regulatory scrutiny of Android will not
lead to any material changes at Google. Largely because there are no direct
revenue streams associated with Android," said Mahaney.
But SunTrust analyst Robert Peck says Wall
Street is not so optimistic. "Many believe there could be some cash
penalty, akin to what Microsoft saw several years ago (several billion).
However, the much more important part would be any impact to top-line growth
rates, should Google be forced to emphasize other services (i.e., YELP) over
its own," he said.
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