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Google Partners Xiaomi to Bring Android One Back to India

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Alphabet Inc.’s (GOOGL - Free Report) Google has collaborated with China’s Xiaomi to revive its Android One program in India. Android One powers Xiaomi Mi A1, a new $234 (14,999 rupees) handset that was launched in the country yesterday.

Google Global Director of Android Partner Programmes, Jon Gold told reporters that, "I would not consider this a reboot... we have been working in this direction now for a couple of years just a little bit more quietly."

Alphabet shares have rallied 16.5% over the last year, outperforming the 12.7% gain of the industry it belongs to.

A Strategic Change

Google introduced the program in India in 2014 to make high-quality budget smartphones available to as many people as possible in developing economies. Under this initiative, Google designed the budget hardware while local companies like Micromax, Spice and Karbonn manufactured it. All devices were priced below $110 (7,000 rupees).

But very few devices were launched leading to speculations that Google will do away with the program. The attempt was apparently a failure due to availability of phones with better specifications in that price range.

However, Google appears to have solved this problem by shifting focus to a phone that is at a comparatively higher price point and loaded with nice specifications. The Mi A1 is Xiaomi’s first dual-rear camera phone that features 12 MP wide angle camera and a 12 MP telephoto camera.

Alphabet Inc. Net Income (TTM)

It comes with a full metal body, 5.5-inch, full HD display, 4GB RAM, 64GB internal memory (expandable up to 128 GB), octa-core Snapdragon 625 processor, 5MP front camera and 3,080 mAh battery.

Google is offering the stock Android along with some pre-installed software including Google Photos and Google Assistant. Frequent updates will be there with Android Oreo expected before the year end and Android P in the future.

Again, Xiaomi is one of the world’s top five smartphone companies and ranks second in India. It appears that Google is banking on Xiaomi’s success to expand its market share and Android user base.

The Android Advantage

Google is pushing Android to multiple markets (low, mid and high range smartphone users). Not only does it help the company to build search market share but also to drive sales of apps and digital products through Google Play.

The move is also part of the company’s bid to improve advertising tools by facilitating the linking of search results with apps as well as deep linking between apps. The company connects advertising campaigns across mobile and desktop platforms and that boosts advertisers’ return on investment.

Mobile app indexing and Mobile Friendly algorithm change will improve user experience and thus drive the next phase of revenue growth.

Zacks Rank and Stocks to Consider

Alphabet has a Zacks Rank #3 (Hold). Better-ranked stocks in the broader technology sector include Applied Materials (AMAT - Free Report) , Activision Blizzard (ATVI - Free Report) and Applied Optoelectronics (AAOI - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Applied Materials, Activision and Applied Optoelectronics is currently projected to be 17.1%, 13.6% and 17.5%, respectively.

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