Why Google Struggles With Hardware

Why Google Struggles With Hardware

Our mission is to bring a
more helpful Google for you. Google’s hardware business
is really confusing. It means creating
products like these. They’re like history, so confusing. You can almost like put
funny music to it. It considers companies like Samsung,
both a partner with services like Android and a competitor with
hardware like the Pixel 4. It has branded devices under Nexus, like
the Nexus One and Nexus Q, Chrome, like the Chromebooks and Chromecast,
Pixel, like the Pixel 4 and Pixelbook Go, Nest, like the Nest
Home Hub and Nest WiFi, and its own name, like the Google
Home and Google Glass. And only a few of these products
have gone on to take a successful share of their respective markets. Google’s a real hardware competitor
in some markets, especially when you think about education and
laptops with its Chromebooks. But in general, as a player against
Apple and Samsung and phones and other places, it’s not considered a
major player in this space. For a company with an
almost $900 billion market capitalization, Alphabet, Google’s parent company, just doesn’t
make a lot of that money from its hardware. But through acquisitions, partnerships,
internal design and developments, Google has stitched together
a product line that makes the company’s complete vision
hard to see. So if the company can’t rely on
hardware as a major source of income the same way Apple and Samsung
do, what is Google’s ultimate goal? The hardware’s true sort of value is
the fact that it helps Google collect information that can be used
for advertising and then to serve you ads anywhere
you might be. I don’t view Google as a hardware
contender because at its core it’s an advertising company. It’s easy to miss Google’s hardware
strategy in its current lineup. Google says it wants to create
products that can exemplify Google’s software and services like Android,
Chrome, Google Assistant and others. But let’s be very clear. Google is not a hardware company. Of its $38.94 billion revenue in quarter two
of 2019, only about 16 percent came from Google’s so-called
“other revenues” category, which includes Google’s hardware sales, Google
Play sales and cloud revenue. The vast majority
of that $38.94 billion income comes from
its ad business. Google captures 20 percent
of all U.S. ad dollars, both online and
offline, and a whopping 74.6 percent of all U.S. search ad dollars. The hardware business has to serve the
rest of the business, which is an advertising business. Where it’s collecting profiles, it’s
collecting data on you. Looking at its history, Google has tried
hard to clean up its product line, like Steve Jobs famously did when
he returned to Apple in the 90s. But it’s still
struggling in general. Google creates its hardware in
three ways: through partnerships, through acquisitions and through
its own in-house efforts. Google’s first big hardware partnerships
were thanks to its operating system, Android. When we talk about flagship best
Android devices, the Motorola Droid was really probably what put Android
on the map in the consumer’s mind. In fact, to this day when
people talk about Android, you still hear them refer to it as droids. It wasn’t the first Android phone, but
it was the first Android phone that got a tremendous amount of
attention and drove a tremendous amount of sales. But the Nexus line
of phones signified a change in the way Google looked at hardware. So the Nexus line was originally
developed, sort of showing what you can do with an Android phone
with the latest version of Android. It was for developers to build their
apps for the platform so that partners in the Open Handset Alliance
could then launch phones based on that. The Nexus One only sold
about 20,000 units in 2010 compared to Apple’s iPhone 3GS,
which sold 1.6 million units in the same year. The next hardware for Google to
tackle was the computer itself. Chromebooks used to be laptop-like
internet terminals that Google developed during its shift to
cloud-based computing and storage. Originally, these laptops just accessed
the internet via Google’s Chrome browser, nothing else. Everything was stored on Google’s
servers, even the applications. The hypothesis is that you were
always connected because at the time when they first came out, there
was very little storage on the device. You had to be connected
for it to do everything. The first Chromebooks were manufactured by
Samsung and Acer and got the products off to a rocky
start, leaving reviewers wondering why Google made these
glorified netbooks. But by 2016, Chromebooks were outselling
Macs, thanks in part to their popularity in schools. In fact, Chromebook took 60
percent of the U.S. educational market share by 2018. It was in 2012 that it really decided
to want to put a lot of money behind hardware. It acquired Motorola Mobility
for about $40 a share for $12.5 billion, marking a
huge investment in Google’s hardware strategy to build its own phones,
instead of partnering with other people to build its phones for it. In a blog post, then CEO Larry
Page said the combination would offer consumers accelerating innovation, greater
choice and wonderful user experiences. The biggest value that the company got
out of it was its patent portfolio so it can go
toe-to-toe with companies like Microsoft and Apple. Then in 2014, CEO Larry Page decided
they wanted to get out of the mobility business and ended up
selling Motorola Telenova for $2.9 billion, which was vastly less
than what they paid for. $9.5 billion less to be exact. I can only classify the Motorola
acquisition as a complete bust. One of Google’s most lucrative investments
was in the company Nest, which was originally acquired by
Google’s parent company, Alphabet. That was sort of the start into
this home hardware foray and at the time it was just
a smart thermostat. I mean, how many houses do you
walk into or apartments where the Nest is the featured element? With its eye still on the
hardware prize, Google announced in 2017 that it would spend $1.1 billion on a cooperation agreement
between itself and longtime partner HTC, a company that
previously developed several Nexus phones and even manufactured a
few Pixel models. I believe this was a reaction
to post, spinning off Motorola, realizing they didn’t have enough
of their own employees or contractors to do what they needed to
do, and they just they needed experienced bodies. Google acquired about 2,000 HTC employees,
many of whom worked on the Pixel team while at HTC,
and the acquisitions continued. In 2018, Google decided to absorb
Nest fully into its own lineup, making it no longer an
independent company under Alphabet. In 2019, Google closed a $40
million deal with watch group, Fossil, and most recently, Google
acquired Fitbit for $2.1 billion. For smaller, more niche
projects, Google turned inward, like with Google Glass, which
was a wearable device. Kind of goes down and is infamous
for not really making much of a breakthrough in the market like
the company had hoped. Glass was advertised as a pair
of augmented reality glasses that could provide users with turn-by-turn
directions, read messages and emails and take
pictures and videos. But the real-life functionality was much
more limited due to its small battery. I personally went out
and bought Google Glass and I was pretty sure at the time
it was going to revolutionize everything. The product was such a flop
that adopters of the glasses were referred to as “glassholes.” Google really didn’t understand the
personal ramifications they would have on its users. That was very negative. Google discontinued the product for consumers
in 2015, but they live on in the workplace. In 2016, it decided to reverse
course again and it made another aggressive stride into hardware. This gave way to incredibly successful
products like the Google Home, which was the most popular smart
speaker lineup in the United States in 2018. I think Google’s best
performing device is likely the Google Mini. And with this new Google-centric
frame of mind, the company nixed Nexus to create its very
own Pixel line of phones, Chromebooks and tablets. They’re not co-branded with
people like Huawei or LG. The Pixel phones have been critically
acclaimed, but pulled a dismal 2.25 percent of the smartphone market
in North America, less than Samsung, LG, Huawei and
even former subsidiary Motorola. I think when you see Google
Pixel commercials and see the YouTube videos with millions of views, you
might get the impression that this is a huge phone and has a
very vocal and dedicated fan base. But when you look at shipment
figures around the United States particularly, it’s not even among the
top five, although we’ve seen in past years that
the Pixel is growing. So besides products like the Google
Home Mini, now the Nest Home Mini, why would Google continue to
sell hardware that is failing to bring in big bucks?
The unspoken interaction or contract between the consumer and Google
is that I’m going to make these devices do amazing things, I’m
going to know things about you so it’s going to do things that I
know you wanted to do and then we’re allowed to advertise
back to you. Google knows a surprising
amount about you. Whether you’re using an Android phone or
just use a bunch of Google apps like Google Maps, Gmail, YouTube
and Chrome, Google has built a profile for you that includes
a lot of information. Google knows that I
don’t have kids. Google knows that I work for a
very large employer that has more than 10000 people. Google knows that I’m
a renter, not a buyer. It does know some details that
you probably know that you’ve never sort of explicitly told them, but
it’s inferred these things through all of your behaviors on Google. Google uses this profile to provide
you with more accurate search results and the like, but more
importantly, it uses that info to serve you targeted ads. Obviously, there’s these Google Homes,
there’s these smart home sensors and all of these things
are also collecting data on us. They also say that all of this
collection is to just make your experience with their
products easier. So they want to be really relevant. They want to be fast. They want
to know that when you’re talking to your home device that you want things
that are in your town or if you’re asking for, you know, a pair
of shoes that they’re going to give it to you and your size. And Google isn’t shy about the information
it collects or how it uses it. Just check out Google’s
privacy and terms page. It has a video
explaining all of this. So it’s very easy to find all
of this information and see what they have available about you. And it’s very easy to opt out. There’s a little button that says,
“turn off my ad targeting.” It’s very easy to do that. It’s a little less easy to
understand from a third-party player perspective what information they have
collected that has now gone out to these third party players. The network is
probably extraordinary. Now when it comes to software,
there are few that rival Google. Android holds a huge majority of
the smartphone market worldwide, and Chrome OS currently powers more than
half of the mobile computers in U.S. schools. When you look at phones, Android’s
the real winner here, not necessarily Google Pixel. When you look at laptops, it’s
Chrome OS made by Google’s partners, not necessarily
Google’s Pixelbooks. But when it comes to putting that
software in every nook and cranny of your life through hardware, it
gets a bit worrisome for consumers. It still has issues that
it has to overcome. It has to convince consumers that
it’s actually serious about making technology and being in
the hardware space. It also has to convince consumers that
they can trust them with being in the most personal areas of
their lives and having hardware that will protect the user’s
privacy and security. It’s hard to say exactly what
the future will be for Google’s hardware business. But one thing is
for sure: if you’re using a Google product, you are helping
Google sell you better ads.

100 thoughts on “Why Google Struggles With Hardware

  1. Google software and hardware is just a mobile Microsoft Power BI that gathers data analytics from all its users. Not exactly something that is suffering since data runs the world these days.

  2. All Google had to do with the pixel 4 is put a wide angle lens and a big battery.

    Instead they put face ID and radar sensors that made a huge top chin and which frankly I don't think anyone really asked for.

    They got rid of in my opinion my favorite feature (the fingerprint scanner).

    Honestly I would most likely look forward for a 4A model without the gimmicks and a better price.

    I think that's where Google should be, unless it can provide Samsung Huawei or One Plus quality designs.

  3. I heard Google now branched into the spying business. Earning money from collaborating with the NSA and CIA to steal private info. See WikiLeaks Vault 7 release

  4. Google's real gold is all the data it collects on all of us. They will eventually create the perfect phone based on your personal tastes, but they know deep down, mastering the software first is most important to their bottom line. The hardware can come later!

  5. Simple Answer: Taxes…Tax Write off.

    All the acquisitions, Research and product Development, and marketing dollars spent with no profit is a tax write off.
    Corporations only pay taxes on profits.

  6. Google has serious leadership problem. CEO literally doesn't have a vision of his own and no control of the company.

  7. If CNBC were just to take a look at tablets, they could have gotten to the answer quicker. Google is barely in this market & pops in and out of it. Many other brands have dropped this market.
    What is it about tablets? All those Android outside developers should rejoice, as tablet users are likely to download apps. What service is Google in? Well, tablets are most likely to be used offline. And the current variety of tablets recognise this by not having GPS built-in.
    Yeap, Google has forsaken those developers, manufacturers, and some consumers. Is Google only interested in advertizing & collecting data?

  8. Why Google Struggles With Hardware
    "In a word….diversity…their hardware group is run by the Nose Bone McGoo tribe of Somalia"

  9. Comparing Nexus to the Pixel line isn't appropriate because for Nexus they manufactured and designed them in partnership with other manufacturers and you don't refer to it until about half way through the video even though you showed that chart at the beginning which made it seem equal. People generally remember visuals more so try to keep them as accurate as possible.

  10. Realistically comparing the sales numbers of the Pixel to the more established phone manufacturers isn't accurate because they haven't been in the market for as long.

  11. Google & Microsoft r basically software companies.
    They should have priced there hardware aggressively for more no. Of users, so they can sell software for money than making money from hardware

  12. No thanks ,cherish the little privacy/ dignity that you're left with ,do not reply truthfully to their ads r surveys, 1 person warned ,count as 2

  13. Google should’ve developed an educational search engine and networks using what already is there in google search in order to reform public schools.

  14. Why did Google sell Motorola? Motorola was a household name and an American company. At the time of Google's acquisition if Motorola, Moto made great phones. Don't understand that decision.

  15. Google tries to hire the smartest engineers who are total nerds and don't understand the mere mortals like us.
    There is a serious disconnect between Google and the people. You would think it would be the reverse given the spying Google does on us. Just look at their social apps Google phone etc. They are all very odd products that work half ass.
    Do you remember Google search asking do you feel lucky today. What was that all about. It was such a turn off I never clicked on it. Stupid nerds at stupid google. Thank god they have a half OS just for kids and phones . No one else uses it.

  16. Biggest problem with the pixel up until now was that you couldn't get it on every carrier. I have a feeling that the market share will start to grow now that that's changed, at least among android people.

  17. They struggle because they overprice mediocre devices. No one I know bought a Pixelbook and I'm for sure not even gonna buy the Pixel 4.

  18. it's because google is an advertisement driven company. everything else they do is secondary, which explains why they come up with brilliant ideas in R&D but drop the ball after the product gets released. Consumers sick and tired of this.

  19. Google is a personal data and advertising cult. You cant be trusted with any more invasion of privacy so no one wants to buy your hardware.

  20. Google is a personal data and advertising cult that doesnt pay its government taxes
    You cant be trusted with any more invasion of private data google so no one wants to buy your hardware.

  21. 9:05 the Pixel phones have been until recently a carrier exclusive for Verizon and most Americans do not buy phones outside of their carrier, hurting their sales.

  22. Google, it’s simple. You can’t Execute. You need the Bill Belichick, of technology ,the next Steve Jobs of hardware to put it all together. But you don’t believe in that mindset, so it will Always be Quantity Not quality. A perpetual Niche player in Hardware. Good luck w Fitbit! It was a great Niche watch and now you’re going to jack up the price and make it as expensive as an Apple watch, essentially killing the Fitbit line. Oh it’s true, it’s true!

  23. I'd prefer a slower rate of innovation to total world domination by mega corps like Alphabet Ink. It's a question of balance. Is what Google gives us so valuable that we are willing to hand over our freedom to this corporation that answers to no one?

  24. Hardware is a high capital but low return bussiness. But its beautiful that it prevents competition to come in coz its high capital. Bussiness these days they celebrate low capital high return. But that means it will attract far more competition. For each their own i guess. America going for software heavy. China going hardware heavy.

  25. I really don't understand this comment section? I've owned a few pixels and they are by far the best phones I've used including an Iphone. When I use my Iphone for work I truly feel like I am stepping back in time IMHO. You can say that the hardware is out of date but it outperforms phones with higher specs, just search it!!! When it comes to editing video for example it outperforms almost every phone!!!!!! The pixel line has moved the ENTIRE industry forward with things like Nightsight so much so that Apple does it now, but Google gets no credit for it, absolutely none. Would you like to compare Google Assistant to Siri, would you also like to compare Google Maps to Apple Maps? This isn't to say that Apple doesnt do some things better but this year it seems like a massive PR push to discredit this phone I really wonder if this is Apples doing given that the Pixel is now available on all the major carriers.

    Let me give you a difference on expectations and value for those complaining about the price of the phone. 1st the Pixel phone is offered for a 100 dollars off within the first month for the unlocked version at Best Buy and there are black friday deals that are buy 1 get 1 free and other half off deals with your standard carrier payment plan. Is that too much for a really good phone with a few flaws? :Lets put this in comparison to the Airpod pros from Apple starting at 250 dollars, and when I say 250 dollars I mean that amount NO DISCOUNT!!!!!! Tech reviewers rave about it''s noise cancelling well at 250 dollars pretty much whatever wireless headphones you buy from bose, sony, sennheiser etc. is going be really good to great at noise cancelling and in some cases a lot better in the noise cancelling department but Apple gets credit for doing something we should EXPECT at that price point, with again NO DISCOUNTS anywhere!!!!!! The originals airpods right now after a year are 10 dollars off, but people don't feel like this is a problem because it's Apple. This type of sentiment keeps the entire space stagnant we except mediocrity as success and ignore true innovation, and 250 dollar noise cancelling headphones is not innovation it's what you should expect!!!!

  26. i would not have stopped with google glass and continued to make the techonology less ugly and more useful. People pay hundreds of dollars for designer glasses.

  27. Answer should you buy a Pixel Phone, Answer No Why?
    * Pixel 4 is Plastic Frame (FOR A FLAGSHIP DEVICE IN 2019!) and bends worse than the iPhone 6!
    * Pixel 3 had Blue Shift Screens, Even today after Software Patches!
    * Pixel 4 has more Hardware (RADAR!) but Smaller Batteries then all it's Rivals even iPhone's!
    * Pixels have all had Software Issues that other OEM's did not have and they are more Hardware than Software Companies so Google which is first and foremost a Software Company that makes Android have no Excuses for Software Issues!
    * Android One Phones exists and often give you better specs for a lower Price plus MicroSD Card Storage, More RAM, More Internal Storage Options (or at least bigger base storage for less $$$).
    * Pixel 4 no MicroSD Card Storage but now No Free Unlimited Cloud Storage WTF Google?!

  28. Google should take note of microsoft when it comes to hardware development.
    Google is just playing by the numbers. Never really creating new ideas. On the other hand, Microsoft's hardware division found success by innovating. They are creating products that are unique and being adopted by other companies.

  29. Google's hardware pricing could play a large factor in their low market share. Compared to competitors, Google's hardware is higher priced and sometimes not as good.

  30. What I want to know is Google Maps selling information on how fast users drive to the automotive – insurance companies?



  33. What make google believe that they can compete with the ps5 and Xbox Scarlett, like there’s no space for another gaming company. You’ll either buy a PlayStation or Xbox or Nintendo switch or a gaming pc and that’s it.


  35. I don't think Google is trying to be a true competitor in the hardware business like Apple or Samsung are. Android exists as a way to get people to use Google's search services, and later on, all of the rest of Google's services like Maps and Gmail and whatever. Google knows that it's primarily and predominantly an online advertisement and internet search business and all of the hardware products it makes, except for maybe the Nest lineup, are just portals to get people to use it's online services.

  36. Google isn’t a good hardware contender because it doesn’t make much of an impact in that market, Apple hardware may not always be the best but with Apple creating the software it takes advantage of every bit of hardware, chrome books aren’t that special, they don’t have a unique battery or anti virus features like some of the bigger brands like macs etc, Apple devices are some of the best on the market for security, google sells devices for a cheaper price over the completion because it uses your data to make profit off of targeted ads, Apple is one of the only hardware companies that actually value your privacy, because it doesn’t run android

  37. Honestly Google has failed a lot in the hardware but I have to say some of their products are really good like if you buy an Alexa over a Google home you're honestly stupid and wasting your money on an inferior assistant I'm sad that the pixel phones haven't taken off because honestly I have a Pixel 3 and it's probably the best phone I've ever owned and I've owned everything from Apple devices to Samsung HTC Motorola Razer phone 2 and the essential phone nothing can compare to the experience I have with stock Android everything is connected so well my sound bar has a Google Assistant built into it and I love it anything I ask on my sound bar also shows up on my phone if I want a more detailed view and so much more they really are the software kings but I'll always have a windows device over a pixel book even then with my laptop running Windows I can get all my Android notifications sent to it everything is connected through my Google account so if I search up something on my Pixel 3 it will show up on my essential phones search history and my laptop and there's so much more little things that Google has done with their software that just amaze me I can't stress enough how good of an assistant Google has Alexa, Siri, bigsby are all terrible compared to it.

  38. Because they can’t hire a good design team, don’t follow what other manufacturers do and consumers like, try to be different when all they have to do is provide an Apple like experience when it comes to software and it’s updates. Now seriously, I’ve seen people make computer concepts on YouTube that make the actual Pixel 4 look like a disgusting mess.

  39. Because they focus too much on software and forget that hardware and build quality ehem*Pixel 4*ehem is just as important.

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