The Chief Minister of Tamil Nadu, MK Stalin, announced recently that Sundar Pichai-RUN Alphabet Inc will be manufacturing its flagship smartphone offering in the state, along with the possibility of drone through the unit, as the reports say.

It was therefore not surprising that Google would be trying to emulate Apple's success in turning India into a hub for iPhone assembly for both Indian and international markets, given that Apple has received recognition for doing so.

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According to Walter Isaacson's biography of him, Steve Jobs allegedly threatened to wage a "thermonuclear war" against Google because he believed the latter's Android mobile platform to be a "stolen product." They collaborated extensively before Android. The chairman of Google, Eric Schmidt, was a board member of Apple Inc. Unexpectedly, he resigned from the board due to the disagreement between Android and iPhone.

Over the years, there has been a persistent pattern of this friendship-and-enmity cycle. Most recently, Bloomberg claimed, citing unidentified sources, that Apple was in discussions to integrate Google's Gemini artificial intelligence into iPhones. By deciding on its mobile device assembly partners for the nation last week, Google made its first cautious move in that approach. It will launch "made in India" Google Pixel phones later this year, as it has officially announced.

Although the massive search and technology corporation located in Mountain View, California remains silent, insiders claim that it has partnered with Dixon Technologies and Bharat FIH, a Foxconn subsidiary, to produce its phones, including the flagship Pixel 8.

It has partnered with contract assemblers who qualify for financial aid under the government's production-linked incentive programme, which lowers expenses. Second, Google is depending on Dixon, a domestic player, and Foxconn, a Taiwanese behemoth that is Apple's biggest seller in India. Apple and the Tata Group, which acquired Wistron, are partners.

Google's Strategic Moves in the Indian Smartphone Market

Initially, Apple Inc. experimented in India by producing a small number of mobile phones. It generated $2 billion in output sales even in the first PLI year 2021–22 (FY22), and by FY24, that amount had increased seven times. Google is anticipated to take a like course.

Google sold 10 million phones globally last year. In India alone, Apple Inc. built 2.5 times as many iPhones. Apple has a 22 times larger worldwide sales volume when compared to other companies. Counterpoint Research reports that Google's global market share is minuscule, with a 0.73 per cent share in the first quarter of 2024. With 17%, Apple's was the second-highest percentage behind 20% for Samsung.

Google's phones are not very popular, not even in India. However, its market share is increasing; in 2023, it accounted for 0.25 per cent of the total, almost twice as much as the year before. According to Counterpoint, it will expand by 39% in 2024. The research agency's founder, Neil Shah, predicts that Google will be able to sell 600,000 to 700,000 phones in India annually once it starts making it in the country.

Google has two business divisions. Its Pixel 8 is priced beyond Rs 1 lakh in the extremely luxury category. It engages in conflict with Apple and Samsung there. Conversely, the Pixel A series offers products in the upper-mid and entry-level premium market sectors (over Rs 30,000), which is where One Plus along with other competitors operate.

“The above Rs 30,000 market is 20 per cent of volumes and 51 per cent in value. That is the addressable market for Google phones in India,” says Shah. This market would include everything above the Rs 30,000 mark. Despite being mostly restricted to the upper echelons of the market, Google has advanced to a more significant play. With a market share of 2% (as of the fourth quarter of 2023, according to Counterpoint), it is now the fourth-most popular phone in the US, although this is still far behind Apple Inc., whose market share in the US is 64%.

After Apple (49%) and Sharp (10.9%), Pixel is now the third-largest brand in Japan, according to IDC, with a 10.7% market share, up from only 1.5% in 2022. Notably, in Japan, Apple outperforms Lenovo and Samsung. In India, Android powers around 95% of all phones sold. With a staggering 462 million YouTube subscribers worldwide, the nation leads the world in YouTube viewership and offers inexpensive mobile internet.

Vietnam and India both add value to phones in comparable ways. However, India's cost advantage over Vietnam has shrunk from 7-8% a few years ago to less than 3–4% owing to the PLI programme.

When it comes to incorporating AI Gemini, Pixel is ahead of the curve, forcing its competitors to catch up. Additionally, it created internally the Tensor chip, which Samsung manufactures and is intended for use in AI and machine learning phones. Apple, however, has expanded the terms of the patent licencing to allow for the use of the Qualcomm 5G modem chip through 2027, as its in-house 5G modem chips have been delayed.

After Apple and Samsung, the arrival of a third multinational brand in India could assist the country come closer to the government's goal of capturing 15–25% of the $150 trillion global electronics value chain by FY26, which might be achieved through exports.

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