Google's rumored low-cost phone represents a shift in the company's strategy (GOOGL, AAPL)

Google plans to launch a low-priced smartphone in 2019 that's aimed at emerging markets, which will be a break from its premium Pixel lineup, according to the Nikkei Asian Review. The new device is expected to be cheaper than Apples most inexpensive iPhone, the XR, which costs $749.

New Features Driving Consumers Who Want Pixel Devices to Make a Purchase Business Insider Intelligence

The move represents a shift in strategy for Google, which previously relied on its Android operating system to capture consumers in emerging markets, as the device is its first attempt at creating its own hardware to reach this audience.

This approach will enable the tech giant to not only circumvent potential regulatory issues that may impact usage of its services but also appeal to consumers with a more affordable device.

Google is likely betting on this affordable smartphone to ensure markets dont move on without its preinstalled offerings in the face of regulatory challenges.Preinstalled apps and services on Android smartphones, like Google Chrome or the Google Play store, are necessary for Google to push users into its ecosystem, and in turn, drive up ad revenue.

However, Google is facing some pushback: After being handed a massive fine in 2018 by the EU for strong-arming smartphone makers into preinstalling services, Google was forced to revise its service bundling. Meanwhile, India, the second largest smartphone market, is also exploring antitrust litigation against Google for similar reasons as the EU.

The introduction of this new, cheaper phone, which comes with its services baked in, should be appealing to price-sensitive customers in emerging markets like India, ensuring that they still have access to core Google services.

Google will likely apply its experience in evolving the Pixel to its new mid-tier phone. The Pixel is a trendsetter for the rest of the Android smartphone market, designed to test and introduce some new features that could eventually make their way to the Android operating system.

While the device has yet to reach mass adoption, it's finally starting to see some success in the US: In Q4 2018, US shipments of the Pixel 3 outgrew its top 10 rivals, making it the fastest-growing smartphone vendor in the region. This is likely due to Google implementing an array of AI-enabled features and eSIM connectivity, as these innovative features were behind consumers' purchase decisions, according to a survey by Business Insider Intelligence.

Google can also introduce some of these innovative features to the lower-cost model to drive uptake among consumers who want more advanced features but value affordability.

Google's rumored low-cost phone represents a shift in the company's strategy (GOOGL, AAPL)

JOIN OUR PULSE COMMUNITY!