Apps spearhead Google’s battle with Apple
May 31, 2015 5:45 pm
Apps spearhead Google’s battle with Apple
By Richard Waters and Tim Bradshaw in San Francisco
Sebastian Thrun, former head of the Google X — the
advanced projects lab set up to make big bets on the future — knows all about
technological ambition. Driverless cars, high-altitude balloons providing
internet access and contact lenses that monitor blood sugar levels were all
products that flowered under his leadership.
But when it comes to the Android operating system for
mobile devices, Mr Thrun says this is not the time for Google to pursue bold
new visions. With smartphone wars well advanced — he believes it is now all about
smaller incremental advances, as Apple and Google slug it out for global
advantage.
“You can have great visions, but change takes
implementation, it takes small steps,” Mr Thrun said last week, after watching
the opening presentation at Google I/O, the group’s annual technology showcase
event. “What I saw was Android playing out, Android getting into the mature
phase.”
Sameer Iyengar, a former Google employee who is now a
co-founder of app maker Beautylish, questioned whether Google was being bold enough
in laying out its tech vision: “The thought leadership is maybe absent,
compared to where it was in the past.”
He credited Google with taking a lead in at least one
area: machine learning — a form of artificial intelligence that the company
says is being used to enhance its mobile software and make apps on Android work
better.
Applications of AI were among the most eye-catching
demonstrations at the event last week, underlining Google’s aims of using its
massive computing base and advanced algorithms to make its services far more
relevant and useful.
On at least one measure, Android has been a spectacular
success. Conceived by Google as a defensive strategy to ensure its internet
services were not locked out of mobile handsets by companies such as Apple or
Microsoft, the software has turned into the dominant smartphone platform —
accounting for about 80 per cent of the market worldwide.
But there is a hard slog ahead. With a disparate group of
handset makers in the Android camp, the platform has struggled to match the
more polished set of services and hardware that Apple has built around the
iPhone, such as Apple Pay and, more recently, Watch.
Also, to make money, Google needs to reinforce the
prominent position of its own services at a time when the open-source Android
world threatens to break apart. Hardware makers, ranging from Amazon to Xiaomi,
are looking to use Android as a platform for their own app stores and services
— displacing Google.
“They have to make sure Android doesn’t just degenerate
into low-end devices and fragmentation,” says Al Hilwa, an analyst at IDC, the
tech research firm.
If that were not enough, Google has to deal with the
consequences of its own, expansive vision. This has taken Android into a broad
array of new markets, from “smart” home appliances to cars. “Where Apple is
always very focused on a few product categories, Google wants to be in
everything,” says Jan Dawson of Jackdaw Research. “It’s hard for Google to keep
making meaningful progress across all those different domains and keep up with
Apple.”
Winning the hearts and minds of app developers — the
focus of Google I/O last week, and the rival Apple developer conference next
week — has become a key part of the battle.
Creating a marketplace where app developers can make
money has been at the heart of Apple’s formula for encouraging them to do their
best work first for its mobile devices.
But the Android world has been catching up.
For most developers, the calculation is now finely
balanced. Like many, Mr Iyengar says his app reaches far more people on Android
devices but, on an individual basis, iOS customers are more profitable for his company.
Google’s Play Store had been gaining ground as a source
of income for developers, but the momentum in recent months turned back to
Apple. Tero Kuittinen, managing director Magid Associates, a consultancy, and
an adviser to several gaming companies, says app makers were “taken aback” by
the shift, which followed the launch of larger iPhones.
According to some industry estimates, the sheer weight of
numbers is finally starting to play in Android’s favour — even if Google is not
the only beneficiary.
Apple’s App Store accounts for about 45 per cent of the
revenue that developers make from apps, compared with 29 per cent for Google’s
Play, according to Digi-Capital.
But counting in the income from handsets in China — where
Google’s apps are blocked, meaning it makes no money — pushes the overall
Android share to 52 per cent, Digi-Capital calculates.
Last week, matching — and trying to surpass — Apple was a
strong subtext of Google’s pitch to developers. New features included Android
Pay, a rival to Apple Pay and a fresh attempt to break into mobile payments
after the disappointment of Google Wallet. A new Google Photos app — with the
promise of software that can automatically organise libraries of pictures —
also echoed capabilities that are already offered by Apple.
But in other areas, Google seemed unprepared. While
smartwatches based on last year’s Android Wear technology have been put in the
shade by the launch of Apple Watch, Google had little new to show off in response.
This was a sign that it is surrendering early leadership in wearables to Apple,
according to Carolina Milanesi, an analyst at Kantar Worldpanel.
Yet some of the latest attempts to extend the Android
universe clearly play to Google’s strengths.
Its new photos app offers free storage for an unlimited
number of pictures — echoing the launch of Gmail, the company’s free email
service, in 2004, although the cost of storage has fallen greatly since then
and has become less of a competitive differentiator.
Sucking in large volumes of photos also presents a new
opportunity for Google to add to its already substantial mass of data about
users. Company executives say they have not made plans to scan the pictures for
advertising purposes but make no secret of the fact that a person’s photo
library comprises a highly valuable source of information about them.
Meanwhile, to improve the experience of using Android
handsets in emerging markets, where low-end hardware and unreliable networks
often hamper performance, Google announced new ways of using its services
offline. These included the ability to view maps and directions while not
connected.
They all represent attempts by Google to shift more of
the value to its own services rather than embed it in the Android open-source
software, says Mr Hilwa — a way to ensure that Google remains at the centre of
the Android universe.
Android smartphones may soon get smarter
Among Google’s most significant announcements last week
were new applications of artificial intelligence, aimed at reducing the steps
needed to complete a task on a smartphone, such as a search.
Machine learning — a form of AI based on advanced pattern
recognition — plays an important part in the new Google Photos app, which uses
facial recognition software to sort libraries of pictures.
An even more ambitious application drives a new feature
of Google Now, a mobile service launched three years ago that tries to predict
a user’s information needs. Called Now on Tap, it analyses what a user is doing
in an app or on the web and tries to guess what they want to do next. If
they’re chatting with a friend about a movie, for instance, the phone will show
ratings, a trailer and a way to buy tickets. Or, if the discussion is about a
restaurant, it summons a page of reviews and a reservation service.
Unlike Apple’s Siri, which was launched with fanfare four
years ago, Google has chosen to keep its advances with AI on smartphones
low-key. That is partly because the company does not want to give away
information that could alert competitors to the extent of the advances it
believes it is making, according to one person familiar with its thinking.
Copyright The Financial Times Limited 2015.
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