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Google Might Finally Compete With Apple In Smartphones

Google's Nexus 5X.Google's Nexus 5X.
Google's Nexus 5X.Courtesy of Google

Google might already be competing with Apple in smartphone operating systems, but it has yet to make hardware. According to a new report, that could soon change.

Google (GOOG) is planning to at least take “more control” over the manufacturing process of new Android-based smartphones, The Telegraph is reporting, citing sources who claim to have knowledge of its plans. The move, the sources say, will make Google more like Apple (APPL), controlling everything from the product’s design to the software it runs.

Of course, Google already sells its own branded smartphones under the Nexus name. However, those devices are made by third-party companies, like China-based Huawei, LG, and others. Indeed, over the last several years Google has sold Nexus-branded smartphones, but has never developed its own.

Google’s strategy stands in stark contrast to Apple (AAPL), which dominates all facets of the mobile experience. The Cupertino, Calif.-based company designs its own smartphones and keeps an iron-like grip on its iOS mobile operating system by not allowing other handset makers to use it. By doing so, Apple is able to control the iPhone “experience.”

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Google, on the other hand, has long relied upon a software model where it offers the operating system companies can use in their own devices. The move has helped Google’s Android become a dominant force in the worldwide smartphone market, and also helped Google generate bundles of cash on mobile advertising and revenue-sharing with developers.

Despite having a software-first strategy, Google has used its Nexus hardware to get more people to its latest operating systems. The Nexus handsets also tend to offer higher-end features, allowing Google to offer devices that compete more effectively against the iPhone and other flagship handsets.

By not offering its own hardware, Google has been able to attract third-party device partners who rely on Android. It’s also sidestepped any potential concern among those third-parties that Google is trying to compete with its own partners.

Google, in other words, has long tried to look like a hardware company’s partner and not their foe.

By developing its own hardware, however, Google could put itself in the odd position of both supporting its third-party vendors and competing with them. Still, rumors have been swirling for years that Google might eventually take the plunge and develop its own hardware.

While history would suggest that Google will continue on the same path and maintain its successful strategy, The Telegraph‘s sources say Google wants to take more control over Android to get more people running high-end hardware and its latest operating system—a challenge it’s faced as both vendors and carriers have proven slow to upgrade consumer devices to the latest operating systems.

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Those sources added that Google is so enticed by the idea that it’s planning to launch its own handsets by the end of the year.

Still, it’s hard to say what’s true. Google hasn’t said what its plans might be. And if history is to be our guide, it would suggest Google wouldn’t want to compete with the companies it relies upon to build its own hardware.

We’ll likely find out for sure later this year, when Google holds its annual Nexus unveiling event.

Update 06/27/16 at 2:48 p.m. with Google’s decline comment.