Google (NASDAQ:GOOG) (NASDAQ:GOOGL) recently unveiled the Nexus 6, a 6-inch phablet developed with Motorola, alongside its new HTC-made Nexus 9 tablet and the public debut of Android 5.0. The device is equipped with a quad-core 2.7 GHz Qualcomm Snapdragon processor, 3GB of RAM, and a 13-megapixel camera. The 32GB model will cost $649 unlocked, while the 64GB one will cost $699. Pre-orders start on Oct. 23, and the device is expected to arrive in November.

The Nexus 6. Source: Google.

With those specs and prices, comparisons between the Nexus 6 and Apple's (NASDAQ:AAPL) iPhone 6 Plus are inevitable. However, investors should be aware that the two phones mean very different things to Google and Apple. Let's take a deeper look at these two phones, and what it reveals about the two tech titans' business strategies.

What the "Nexus" brand actually is
Google isn't interested in developing hardware on its own, since it's a much lower-margin business than its core competencies of advertising and software. It made that mistake once by acquiring Motorola Mobility for $12.5 billion two years ago, which it subsequently sold to Lenovo (NASDAQOTH:LNVGY) for $2.9 billion. The deal will close next year, so the Nexus 6 is expected to be Motorola's last smartphone under the Google banner.

Instead of selling smartphones and tablets directly, Google realized that it would be less risky to co-develop devices with hardware partners like LG, Asus, Samsung (NASDAQOTH:SSNLF), and HTC. That minimized the bottom line risk for Google, and gave its partners a Google-branded marketing boost. While that strategy can help generate consistent hardware sales for its partners, the Nexus system is mainly about ensuring that a single Android manufacturer, like Samsung, does not take over the OS. That's why Google rotates the Nexus brand between these hardware partners, instead of permanently licensing it to a single one.

Therefore, the Nexus 6 shouldn't be regarded as the iPhone 6 Plus' competitor. Instead, it should be seen as Google's way to prevent Samsung -- which controlled a fourth of the global smartphone market in the second quarter -- from wiping out smaller competitors like HTC, LG, and Motorola.

Why Google is more worried about Samsung than Apple
Google is worried about Samsung, because it's obvious that the South Korean tech giant plans to eventually part ways with Google.

Samsung already runs its own app store for Galaxy devices. This impacts Google's ability to monetize Android, since the company takes a 30% cut from Google Play Store sales. Samsung also launched its own open source OS, Tizen, which it installed across its Gear smartwatches (as a rival to Android Wear) and an in-development smartphone, the Samsung Z. If Samsung ever gets confident enough to dump Android and install Tizen across all of its devices, it could walk away with a huge chunk of Android's 85% global market share and control the third largest mobile OS in the world.

Therefore, Google's Nexus 6 should be compared to Samsung's Galaxy Note 4, its intended target, instead of the iPhone 6 Plus:




Rear Camera




Nexus 6

2.7Ghz Quad-core




3,220 mAh

$649 (32GB)

$699 (64GB)

Samsung Galaxy Note 4

2.7Ghz Quad-core




3,220 mAh

$750 (32GB)

iPhone 6 Plus

1.4Ghz Dual-core




2,915 mAh

$749 (16GB)

$849 (64GB)

$949 (128GB)

Source: Industry and company websites.

It's obvious that Google and Motorola are trying to take down the Note 4 by offering a slightly larger screen for a lower price. The Note 4's only strength, by comparison, is a slightly more powerful camera.

Google and Apple want different things
Google, through the Open Handset Alliance, or OHA, is focused on expanding its version of Android -- which is intertwined with Google's services -- across the smartphone market. Google's OHA partners like HTC, LG, Asus, and Acer agree to integrate Google's Services and follow its guidelines for customizing Android on their handsets.

By comparison, members of the Android Open Source Project, which include custom ROM makers like Cyanogen, believe that Google's "closed source creep" across Android should be halted. Yet Google needs Android to continue down the OHA path, so users can make digital purchases from the Play Store and use Google Search to provide more mobile ad revenue.

Apple, on the other hand, is a hardware company which specializes in selling expensive, flashy devices at high margins. Since its hardware and iOS are contained within a closed system, Apple never has to worry about a competitor forking its OS or installing a competing app store within its walled garden.

The takeaway
Plenty of consumer tech websites will compare the iPhone 6 Plus to the Nexus 6. Those comparisons, while important for consumers, aren't significant for investors. Investors should remember that the Nexus 6 is designed to take on Samsung's Galaxy Note 4, which represents a clear threat to other Android devices and Google's long-term plans for monetizing Android.


Leo Sun owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.