Google launches Pixel Phone. Challenges Samsung, iPhone

By Julia Love

SAN FRANCISCO (Reuters) – Alphabet Inc’s <GOOGL.O> Google on Tuesday announced a new “Pixel” smartphone and a virtual reality headset, making a concerted move into home electronics and challenging Apple Inc’s iPhone <AAPL.O> at the high end of the more than $400 billion global smartphone market.

The string of announcements, including the $649 Pixel, a new Wifi router and its voice activated digital assistant for the living room, “Home,” is the clearest sign yet that Google intends to compete directly with Apple, and even its own Android mobile operating system customers to create a world of integrated devices and services that meet every digital need.

The moves also show Google is taking tighter control of its products.

Google lets Android device makers modify software almost without limit, which has helped make Android the most-used mobile operating system in the world. But company executives boasted that the Pixel was developed in-house from start to finish and gives it a direct hand on a platform for the distribution of its internet-based services.

Google said it would work exclusively with a single carrier in the United States, Verizon Communications <VZ.N>, on the Pixel, echoing Apple’s agreement to launch the original iPhone with AT&T. That deal that gave Apple unprecedented control over the look of the phone and how it worked.

Hardware chief Rick Osterloh told Reuters in an interview that the new announcements showed hardware was more of a focus at Google.

“We have pulled everyone together into one organisation, which allows us to focus on key problems,” he said. “The thinking is that if we can work on hardware and software together, we can innovate much better.”

Still, Osterloh said that the Home device in particular showed that Google was still open to working with other companies, distinguishing itself from Apple.

Shares of Alphabet were up a tick in early afternoon New York trade. Shares of Verizon were down about 1.4 percent.

Google has for years toyed with various approaches to building its own hardware without alienating manufacturers such as Samsung Electronics <005930.KS>, the world’s top smartphone maker. Google has sold another line of phones, called Nexus, since 2010, but the devices have gained little traction.

Google also announced a “Daydream View” virtual reality headset, which will be available in November for $79, in time for the end-of-year shopping season. Home will be available for $129, including a six-month trial of ad-free YouTube.

Pixel phones will come in black, blue and silver and will have 5 and 5.5 inch (12.7 cm and 14 cm) screens. It will have what Google called the best-rated camera on the market and will be able to get a 7-hour charge in 15 minutes. Pre-orders begin on Tuesday.

Venture capitalist Benedict Evans questioned the need for the new phone, asking if it was “Nexus 1.5” — not even a full-fledged second version. “So – Pixel is an undifferentiated high-end handset with some, limited distribution (and software that Androids will have),” he tweeted.

Because its mobile software is available so widely, Google has struggled to distinguish its own devices, said analyst Jan Dawson of Jackdaw Research.

Google “wants to have this end-to-end experience, but it’s not clear that people really want that,” Dawson said.

The Home device represents an important move in an intensifying battle between Google and other major tech players to establish the dominant “digital assistant.”

Google Assistant, Amazon’s Alexa and Apple’s Siri are vying for supremacy as more people search the web and make purchases online through voice commands, which may eventually supplant keyboards and touchscreens as the primary means of controlling some digital devices.

(Reporting by Julia Love, additional writing by Peter Henderson; Editing by Bill Rigby and Alan Crosby)