Apple, on the other hand, is the exact opposite of Google. Apple is great at making hardware but usually relies on third parties to make software and services that would make Apple’s hardware attractive. Although iOS and MacOS are great on their own, Apple’s software offerings like iTunes, iCloud or Apple Maps have always had their share of controversies. Both Apple and Google are great at fields from which they make the maximum money. For Apple, it’s hardware and for Google, it’s software and services. Recently, there’s been an increasing attempt by both companies to try and dominate each other’s field of expertise.

For quite a few quarters, Apple has been trying to change the narrative that it’s now a software and services company and Google with their Oct 4 event wants to show that it’s just as good as Apple at hardware if not better. Apple and Google’s need to be more like each other is understandable. From a top level, current computing needs involve hardware + software + services. It’s only the combination of these three that allows users to make the most of their computing device. Being able to have control over all three allows for unique cross-selling and integration opportunities. Take Apple Music for example, had it not been for the billion iPhones Apple has already sold, would Apple Music be able to notch up 17 million subscribers in such a short time?

Being able to control Hardware + Software + Services is surely an exciting proposition, but I don’t think it’s in Apple and Google’s best interest to try and do so as of now. In this article, I’ll try and explain the same.

Google’s focus all throughout the ‘Made by Google’ event was on Google Assistant. A form of Google Search that’s personalized for everyone. In order to make sure that Google Assistant can deliver the best possible experience, Google thought that it’s possible to do so only by making their own hardware. That’s a perfectly valid theory but let’s analyze with a little more detail.

It must be kept in mind that Google is a licensor. If Google gains some serious traction with the Pixel smartphones, it’s bound to annoy other manufacturers who are Google’s licensees. It is true that the Samsung Galaxy Note 7 has been a total disaster but whatever position Android has in developed markets such as America, Europe etc has in large part been possible because of Samsung. Now if Google manages to capitalize on the Note 7 fiasco with its Pixel lineup, it’s bound to annoy Samsung and the Korean company would respond.

I don’t think Tizen or any other third party operating system is a credible threat at this point in time. Also, most people are now accustomed to the Play Store and Google’s suite of apps to such an extent that being able to run their daily lives on a smartphone running AOSP is simply not possible. Even if Pixel does end up capitalizing on Note 7 fiasco, Samsung would still be forced to use GMS based Android. But the one place where Samsung could harm Google is by shipping even more third party apps on their smartphones. Android gives manufacturers the flexibility to pre-install apps. Already, Google and Samsung officials have been known to met in the past to reduce the number of apps the Korean company pre-installs on its devices. Those meetings have definitely bore some fruit as TouchWiz is not as heavy it was before and Samsung has been quietly retiring a lot of its in-house apps.

But if Pixel were to gain traction, the best way for Samsung and other manufacturers to reply would be to once again kick their own software and services into high gear. The possibility of this becomes even higher considering that at least as of now Google has decided to keep Google Assistant and some other features exclusive to Pixel.

Google is in some way repeating the mistakes it did with Apple. Google’s decision to keep turn by turn navigation exclusive to Android annoyed Apple which led to the creation of Apple Maps. I agree that Apple Maps was a total disaster at the start but has improved as years have passed by. Regardless of that, it was made the default maps app and still is the case. Usage of Apple Maps on iPhones by virtue of being the default application is definitely higher than that of Google Maps. Those mapping needs would have also presented Google opportunity to target ads, an opportunity that was missed because Google decided to keep turn by turn navigation exclusive to Android.

The current situation is not that different. Google entering the smartphone market and keeping Google Assistant and certain other features exclusive to Pixel is bound to annoy manufacturers which can have unwanted consequences on other Google products. Samsung has already acquired Viv which many say is going to be its own version of smart AI. Now in order to compete with Google, Samsung can very well integrate Viv left, right and center in Galaxy smartphones and demote Google Now. It can be argued that unlike iPhones, the default apps can be changed on Android smartphones, but how many people do that, honestly?

Let’s be real here. Pixel is going to ship a few million units at best. Huawei, Apple and others are going to be the prime beneficiaries of the Note 7 fiasco. Google neither has the distribution nor marketing budget or brand name to make Pixel an iPhone-like success. For the sake of selling a million Pixel smartphones, Google risks upsetting its partners that sell hundreds of millions of smartphones. Now it’s important to remember here that Google has a horizontal business model. Google makes money through ads and almost entirely depend on the number of users they are able to reach.

Just like how upsetting Apple made Google miss billions of mapping requests on iPhones and the accompanying ad revenue, a similar situation can arise over here as well, whereby upsetting its Android partners Google can undermine its own services on Android.

Google claims that the pixel smartphone is special as it’s designed in-house and you can’t help but see a sly reference to Apple. But the problem over is that in the case of Apple, the company’s hardware, software and services team collaborate with each other in order to provide the best possible experience. That’s possible because iOS is used on iPhones alone and a lot of Apple services such as iCloud are exclusive to the iPhone. Apple’s chip division can talk with its software division which in turn can talk with its hardware division which in turn can talk with its camera division and make sure a single product with the best of all divisions is released to the public.

In the case of Google, Hiroshi Lockheimer in an interview with Bloomberg had already made it clear that Google’s hardware division led by Rick Osterloh will not get any special treatment and will be treated just as all other manufacturers. The question then is where does the special element come from? There are rumors of Google making a custom SoC for its next-gen Pixel smartphones. Now if the SoC division of Pixel cannot make any special changes to Android so that Pixel performs well on the custom SoC, then what’s the use? Surely Apple’s SoC have some of the best custom architectures in the entire smartphone industry and always manage to impress on Geekbench. But apart from raw performance, another reason that makes Apple’s custom SoC is so special is that the chip division of Apple can actually collaborate with the software division and make changes to iOS so that the custom SoC is able to deliver the best possible performance.

Rather than making their own smartphones, Google should have tried and collaborated with its partners to integrate Google Assistant as much as possible in the smartphones of partners. How much ever Pixel manages to sell, it will always be a tiny fraction of what other Android manufacturers will manage to sell in totality. Forget about the reduced distribution of Google Assistant because of it being exclusive to Pixel, but Google’s move to keep it exclusive can make its partners even more aggressive in promoting their own apps or the apps of competitors like Microsoft which can have an impact on other Google services as well.

One could argue that the iPhone like pricing of Pixel smartphones gives Google a way to make money out of hardware but a lot of it would be eaten up by marketing, R&D costs etc which would leave the net profit very low. On the other hand, if something like Google Assistant had hit it off with the public, it would have given Google another potential billion user product that Google could have monetized through ads.

Apple for the past few quarters has been trying to showcase itself as a software and services company. The reason is but obviously the slowing iPhone sales. For the past few months, Apple has been touting its lead in AI via several publications. There was definitely increased promotional activity surrounding AI in case of Apple.
I will admit that smart assistants have a pretty vital role to play going forward. In fact, they can be the next big computing platform itself. All big tech companies have a smart AI of their own. Google has Google Assistant. Apple has Siri. Microsoft has Cortana. Amazon has Alexa, Facebook has M and now Samsung has Viv.

All of the tech companies out there, it’s safe to say that Google has the best AI in the form of Google Assistant. What makes Google Assistant smart is, of course, Google’s years of work on Artificial Intelligence and Machine Learning. Google has hired so many AI experts, released so many research notes on AI that their lead is very visible. But what also sets Google apart is the vast amount of data the company collects and feeds its AI systems. Most AI systems today are based on machine learning whereby the more data you give them, the smarter they become. Google being a company that sells ads, has mastered the art of data collection ever since its birth. After all, the effectiveness of Google’s ads depends on how targeted they are, and ads can be extremely targeted only if we have enough data about the person on whom the ad is being targeted.

Google also has been accused of not respecting the privacy of individuals on several occasions and yet has moved on undeterred. Now compared to Google, Apple is the exact opposite in terms of privacy. This was very evident during the San Bernardino terror attacks where Apple didn’t give the passcode to FBI for the iPhone 5S of the terrorist, no matter what. Apple also released something called differential privacy this year where data sets are anonymized but again that just reduces the effectiveness of data in question.

The very reason they are called “assistants” is because they are personal. Only way assistants can be useful is if they know as much unique data about as possible. If assistants are given aggregated data about a bunch of people, the experience will never be good for any of the people whose data has been aggregated. Apple’s stance on privacy fundamentally puts it at a disadvantage when compared to other tech companies.

Also to be noted is that the smarter these AI assistants become, the lesser the need for laptops, smartphones etc. Take Amazon Echo for example, the speaker is already able to perform a host of tasks such as book a cab or order food etc. The only thing that’s stopping Echo’s growth is how smart Alexa can be, the smarter Alexa becomes, more the tasks you can perform with her and the lesser you need your smartphone or laptop. Apple makes most of its money by selling great quality hardware at premium margins. Currently, Apple derives most of its profits from beautifully designed hardware combined with great software and a slick UI. When someone pays for an iPhone or a Mac, they are paying for the entire software, hardware, and services stack. But when it comes to a smart speaker, there’s honestly no UI to take care of. In the case of speakers, it’s just the smart assistant inside it that matters. What matters on the hardware front is how well the speakers are able to listen for commands and separate the command from background noise. Sure Apple can innovate by creating a speaker that’s better at listening than others but how long before that gets commoditised?

The one difference is even though a smart AI might not be Apple’s strength or maybe something that Apple is structurally disadvantaged against, they have no choice but to try as it’s going to play an important role in the future. By comparison, Google can afford to leave hardware manufacturing upon its partners and concentrate on software and services alone.