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Why Google is entering the mid-priced smartphone market

During its annual developer conference in early May, Google unveiled new smartphones that retail for about half as much as the premium Pixel 3. By doing so, the search giant is meeting the demand for cheaper smartphones while retaining some key higher-end features in the process.

The company announced a cheaper version of its premium Pixel 3 and 3XL and expanded distribution in the US, two moves that will shake up the market for mid-priced smartphones. The Pixel 3a retails at £399 ($399) and 3a XL at £469 ($479) respectively.

The phones offer lower specs and hardware, such as plastic rather than glass, while holding on to some attractive features, such as the high-end camera for which the the Pixel line is known.

Google is also rolling out software features that are unique to the mid-range smartphone market, such as call screening, which allows Google Assistant, an artificial intelligence function, to answer a call and speak to an unknown caller to ensure that spam is avoided.

In the US, Google is expanding its carrier distribution for some of its Pixel phones beyond Verizon. Pixel 3a and Pixel 3 are now available through more carriers, including Verizon, T-Mobile, Sprint, US Cellular, Spectrum Mobile (Charter), C Spire and Google Fi. Internationally, Google’s previous distribution partners will carry the phones.

Google has quickly responded to a market where demand for premium smartphones has slowed. Apple and Samsung are feeling the pinch as has Google. In its most recent earnings report, Google’s parent company, Alphabet, indicated sales of its flagship Pixel phones were falling. Similarly, Apple reported last week that iPhone sales fell 17 per cent year-over-year in the second quarter to $31 billion after slow demand carried over from 2018.

Historically, Google’s hardware strategy has been about furthering its AI ambitions, but it has long needed a larger installed base of Pixel phones to move this strategy along. Google Assistant, while available on Android smartphones, is a better-integrated experience on all Pixel phones.

Offering solid mid-range phones through more US carriers should significantly increase sales. But Google needs to back up these products with some aggressive marketing to highlight what is truly innovative about its offering.

With the launch of these new phones, the competitive threat is higher for Samsung than Apple, whose users are locked into the iOS ecosystem. Chinese vendors trying to get a foothold in the US market now also face stronger competition.

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