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Google's Move Into Hardware Is About More Than Devices

Google has ditched its Nexus line of products after a few years. Initially introduced in 2012 to showcase Android’s capabilities and stimulate interest amongst OEM partners and consumers alike Nexus has now given way to Pixel as Google switches from working with selected partners on devices such as smartphones and tablets to new ‘designed by Google’ for a range of new hardware. This blog examines why this is and looks at the bigger picture behind Google’s new strategy as it extends into VR, smarthome and beyond. 

Whilst Pixel was introduced as a brand with the Pixel Chromebook in 2013 and followed by the new tablet announced last year it was the recent announcement of the all-new Pixel smartphones that has garnered the most attention. Smartphones are a much bigger product category than tablets and Chromebooks. And now Pixel is a halo-product, a showcase for Android, with Google looking to closely integrate its new software platforms to launch new services and enhance existing ones.

In a way, this is similar to Microsoft’s Surface brand and its brand strategy for that; in both Microsoft and Google’s case, Apple should be credited with influencing their product management strategy. Much attention will be paid to whether Google can use Pixel to grow its brand and mindshare as Microsoft has done for Surface, which remains one of the bright spots in a stagnant tablet market and has done much to provide growth opportunities with many OEMs following suit in the convertible and 2-in-1 categories. The smartphone sector is similarly slowing and it is more important than ever that companies look to differentiate. Pixel gives Google the opportunity to do this without relying on partners to deliver its devices – and without diluting its software capabilities and reach with their own applications.

The other point of note is that, like Surface, Pixel has continued on the move last year (with the Nexus 6P) from cost-effective to premium flagship. This reduces conflict and competition with the majority of Android manufacturers – alleged to be a big factor in Google quickly moving to off-load its Motorola Mobility division not long after it was acquired – and hopefully maintains the balancing act of maintaining cooperation whilst minimising competition.

Why take this risk? By producing its own hardware, Google will better understand the complications of integrating its own software and tailoring the whole package to consumers’ preferences to enhance the user experience – especially with regard to combining hardware and software as effectively as possible. This is a point which has seen discontent expressed with regard to its Android Wear and Cardboard platforms for wearables and VR. By its very nature, Google’s openness leaves it trying to standardise implementations in order to please multiple partners with different interests.

This openness in effect restricts customisation and tailoring to different requirements. With Android Wear, a common complaint has been that the one-size-fits-all approach has left it acting as a Swiss Army knife trying to be all things to all people whilst limiting OEMs’ abilities to maximise battery life (a key point for consumers). With Cardboard, the more basic implementation prevented OEMs from improving the user experience with head-straps (for hands-free use) and additional sensors (for greater/smoother accuracy and involvement).

This approach has caused some issues, with Samsung being the most prominent absentee from both of these platforms, choosing instead to develop its own software and platforms for both wearables and VR. Huawei is currently rumoured to be considering also adopting Samsung’s Tizen OS for its new smartwatch. Perhaps it is these two companies’ size and scale that means that they do not have to be so reliant on Google but it’s a strong indication that the two leading Android smartphone manufacturers are looking elsewhere. Now, as a developer and provider of complete products Google will understand more about what is required to combine its software and hardware and learn of the nuances that have to be taken into account, which is something that could benefit their OEM partners as well as itself.

In order to effectively implement all of this, Google has also brought in a new retail strategy. Now its products are available in physical stores, no longer just through its online Play outlet. This gives it a much bigger presence and reach, which will boost sales. Minimising competition – whether deliberately or not – Google has announced exclusive distribution deals with MNOs in key countries as well as leading retail chains. This gives it a chance to have consumers more involved, even if only window shopping people will be able to see and try out the products in person rather than looking at images and reports online.

Also announced alongside the Pixel smartphones were several other devices that are new to Google and to demonstrate its intent to put its new philosophy into practice. Coming soon after it recruited Amazon’s lead hardware developer, Google has announced Google Home, Daydream, Chromecast Ultra, Google WiFi and Google Assistant. Okay, Google Assistant is not hardware or a device but it is important and goes beyond what other virtual assistants are able to do; it is smarter, more contextually aware and more interactive than other platforms currently out there. Amazon has taken the lead with its Prime multimedia services, Echo and Alexa. In fact, Alexa being integrated into 3rd party devices perhaps is the biggest indicator of the threat to which Google has responded. Google now has a much better opportunity to maximise its broad range of platforms and applications and better understand how to implement them to be more successful with both partners and consumers.

Our opinion at Futuresource is that this is perhaps the key point. Google has been able to test the waters with various software developments over the years but it has struggled to really go beyond search and advertising (possibly with the exception of Maps and location). It has done well to adapt to mobile, with Android serving it well there. Beyond that though? The new devices, integrating with Assistant and other software will give Google direct access to the new holy grail, data! Google will be much more able to utilise the vast amounts of data expected as we increasingly migrate online and move away from traditional UI and devices to voice control and sensors supported by machine learning. 

By placing the emphasis on OEM partners to date, Google has been at risk of missing out on data. By producing integrated solutions it can go straight to the source and provide a more-rounded experience to customers whether they are out and about with their smartphones, living their daily lives at home, gaming and consuming multimedia content, listening to music, exercising, at work, travelling in their cars or interacting with potential new future connected IoT devices. Think of Google Assistant operating with your car as you work through your calendar, stream your music, plan your shopping list, schedule your meetings, check your recent exercise regime, pay for a new purchase and skip traffic jams – all on your commute before you step foot outside your car.

About the author

David Tett

About Us

Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.