Alphabet Inc.’s (GOOG) Google unit wants to steal mobile phone users from Apple Inc. (AAPL) and is updating its Android operating system, or OS, to meet that end.

Citing people familiar with the situation, Bloomberg News reported the new Android mobile OS is being designed to work with smartphones that are stealing Apple’s so-called notch on the top of the Apple iPhone X. Initially iPhone X users questioned the need for the notch or a cutout at the top of the screen, but they are now growing used to it. A new crop of smartphones is expected to hit the market that includes the same notch on the top of the screens so the manufactures can fit cameras and sensors into the devices. (See also: Google Expects Big Sales From AR Android Devices.)

Google’s Android update is scheduled for later in 2018 and could also include deeper integration with its voice-activated Google Assistant feature. Bloomberg reported it is also expected to improve the battery life of Android devices and be able to handle newly designed phones including ones that have multiple screens or screens that can be folded. Bloomberg said the OS refresh is being called Android P and will enable developers to integrate Google’s voice-activated technology inside their apps. One of the people familiar with Google’s plans said the company has mulled integrating a search bar on the home screen that works with its Google Assistant, although it may not be introduced this year.

Android's Notch Babies

A main goal with the updated mobile OS is to lure iPhone users to Google. Android devices dominate in the low and mid-range side of the market while Apple owns the high end thanks to its pricey iPhone 8 and iPhone X. The iPhone X has a starting price of $999. If Google does embrace the so-called notch with its OS, it could eat into Apple’s high-end dominance. Android handset makers will be able to stay in lock step with Apple when it comes to design and technology as a result, noted Bloomberg.

Although some Apple users and rivals have been critical of the notch—Samsung Electronics made fun of it in a commercial—Google’s move to include notch-like features in its upcoming Android OS update implies it thinks the iPhone X is a winner. Bloomberg noted that Huawei Technologies of China is working on a device with a notch while a device from Essential, operated by Andy Rubin, the creator of Android, already has it. (See also: Why Apple's Supercycle Has Only Begun.)

Google’s attempts to displace Apple when it comes to pricey smartphones comes as Apple is reportedly in talks with Goldman Sachs about the Wall Street firm offering financing to Apple buyers as part of some type of upgrade program. Earlier this month, The Wall Street Journal reported ongoing talks between the smartphone giant and the investment bank about providing financing for an upgrade program similar to what the Cupertino, Calif.-based iPhone maker launched in 2015 with Citizens Financial Group. Under that program, consumers can access interest-free loans from Citizens for iPhone upgrades. Having an upgrade program is becoming increasingly important for Apple given the high prices of its latest smartphones. For its first quarter of this year, Apple reported a 1% decline in iPhone sales but the average selling price jumped by more than $100 or 14.6% to $796.

 

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