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”

  • The sole reason I upgraded my iPhone instead of switching to the Pixel 3 XL was its obnoxious notch — I can’t say their newest design is much of an improvement, either.

  • Hey google you can stop collecting my data, as I have NEVER bought anything because of an AD ever. No commercials or advertising has ever influenced me to buy something. I just don't care about ads, I have developed the ability to tune them out, automatically mute the volume with one button press, or just go do something else while the ad is playing. So you can stop collecting data on me, you won't make anything off me, sorry but not sorry..

  • Alphabet is a gaggle of fiefdoms. You just can't see the fiefs from the outside very clearly. And the companies only strategy is to sell more ads.

    Likened to the old days, you rarely saw Yellow Pages publishers making telephones.

  • Cheers to repeating "Google is not a hardware company" a million times by million other people in the first 2 mins of the video… You think 3rd grade children are watching this video??

  • From what I heard, Pixel phones make 20% margin and iPhones make 40% margin. Not sure why Apple is able to make smartphones with a much lower price

  • They trying to copy. But not the right way. Instead of removing things they need to add more stuff and polish it instead. I mean Pixel 4 looks cool but also with many flaws and less stuff then a top android phone, at a premium price.

  • I am a big Pixel phone fan and unfortunately a big part of their hardware struggle is also their customer support. I have had to replace a Pixel 3 twice and dealing with their support team is not easy and can be really frustrating.

  • I didn't see any concrete explanation as to "Why Google Struggles With Hardware" The video doesn't live up to the title, all they did was give a history of good HW products.

  • All they had to do was copy Apple like Samsung, xiaomi and huawei, instead they want their own way, messing up nexus and messaging.

  • They just need an operating system to tie their ambitions together for people to understand their vision. What they do post-android will be so interesting. Me thinks.

  • Hayden’s Mobile games gameplay says:

    Google should give up with the pixel phones now seems like the pixel 4 is a iPhone wannabe without the notch

    Jerryrig everything did a good explanation about the pixel 4 in his video about it

  • I used google nexus for long time..one of the best hardware in the world it was.Who told Google's failure on hardware ? It's a bias review all I can say.

  • Quantum Uncertainty Workshop says:

    maybe if they stopped trying to work towards quantum supremacy they could invest in better designers for their phones…

  • The imported Indians is google first big problem. For example, Google glass was invented by an Indian imported worker, because he was stopped by the police too many times.

  • I hit ads for almost every single video that I watch on YOUTUBE, but surprisingly for this one talking about Google I did not see any. Did CNBC disabled ads for this video or Google did? 🤔

  • They're trying too hard to copy Apple, it's not even working for them. Plus even alienating their audience already, every Pixel event or a new Android release it gets worse and worse than before. Or simply getting too iOS-y on Android.

    Second, their distribution of the hardware is limited other than the western market. While the Chinese OEMs and the Koreans are cashing on the mid range phones in other countries and making a lot of money for it. This is where Google is not getting, they cannot be a new Apple or copy the same formula from them. It's not working!

  • Hardware is a waste all around because the real advances in the field and Moore's Law probably won't see the light of day (commercially) for about a decade or so

  • The stark difference between Google and Apple is simple, and applies to both hardware and software. Google go to great trouble to build things they genuinely think that people will like and find useful. Apple go to great trouble to make their devices 'desirable' and 'aspirational' and price them accordingly.

  • Not. Making. Their. Money. On. Hardware. It seems the Google hardware guys don't get that. Stop. Making. Money. On. Hardware. That is how you become a market leader. Simply sell the best products AT COST. No profits just sell these Pixel Phones at $299. NOT $799 dammit!! And the Chromebooks too, $399 maximum. Please stop making $999 Chromebooks, it's really humiliating. The day top of line Pixel phones sell at $299 and top of line Arm powered Chromebooks sell at $399, Google hardware will instantly own the biggest market share. And that will significantly change the market. Google makes all its money NOT ON HARDWARE. So quit cloning Apple already!

  • The Pixel is everything terrible about the I Phone, but worse. Huge ugly camera for 3 cameras on I phone, well Pixel has the same size for only 2. Weird ugly notch on I phone, huge humps on both sides for Pixel. Lots of dumb things like that.

  • What I don't fully understand is how you say the Pixel phones are about 3% of the phone market. I understand that is a small amount, but when you actually look at it that's due to it being on one provider this whole time. Until a few weeks ago with the Pixel 4. For it to only be 3% of the market of phone hardware I'd say that's pretty dam good numbers. Now that it's released on other phone providers wait and see then report accurately for the next year.

  • Google uses other businesses to manufacture their hardware.
    Hardware is like a taxi for them. They want to be the taxi company, instead of making the hardware.

  • Microsoft Windows: pushes up glasses to face The reason why my son who makes so much money is struggling with hardware is because it's been half assed hes not working hard as much as Apple but is making money it's like watching my own kid create his own play toys which is cute but embarrassing at the same time. As you can clearly see Apple made everything about himself as well to include his mother Mac who is merely helping out her son from time to time. When both me n Apple were created we were being taken care and built up slowly but Apple gained the upper hand and I came last yet eventually gained an upper hand over all other devices which includes Google in certain ways that were different n somewhat hard to explain but luckily I work more smoothly than google where u have bugs and tiny little problems here n there and the increase of more tablets and phones, but of course I halted and stayed at tablet mode and continued to increase bug fixes constantly n make sure everything was running smoothly. But the moment I decide to give my Microsoft store an upgrade many more peeps will cluster just to buy me because I will have all apps necessary by that time n I plan on going nice n slow besides I'm in no hurry and neither is Apple I hope you all do start realizing that google is starting to look more n more worn out but I wouldn't be surprised if my son chose not to give up and continue this struggle. sips on coffee for a few mins I'm going to pay Apple a nice little n besides it's be good to talk about something less stressful n plus I've brought him his favorite lemon cookies with wine n besides he hates juice he'll only ever drink water sparkling water alcohol n wine n besides it's better to stay on his otherwise he'll complain all day long. gets up smoothes self for a few mins leaves T.T

  • The next Google flop. Pixel 4 is a definite step back from Pixel 3, and that's not good in a year when Apple is taking step forward with iPhone. I really like Pixel 3, and Google really dropped the ball with 4. They are charging a grand for a $500 phone. No dual front firing speakers. Who cares about gestures really. No wide angle camera. The colors are horrible. Maybe they have stock in dbrand. It's not a horrible phone. It's just missing little things that should be in a phone that costs $1000. This phone will tank worse than the 3 did and won't be worth owning until the used market price on Swappa drops under $500 which won't be until the Pixel 5 comes out or the maybe the 4a. Hopefully by then someone at Google will start caring about meeting customer expectations.

  • Google released a “flagship” phone though it’s hardware isn’t anything new. I loved google till I saw what Samsung was doing and Samsung actually realised that a flagship phone is the best hardware on the market. Google pixel 4 is trash and I don’t recommended it!

  • Trouble is despite reviews and industry tech reporters. I always come back to pixel phones. Best experience and livable device apart from an iPhone. It's not always about numbers.

  • "If you are using googles products, your helping google sell you ads" – oh so me watching this video on google giving me ads now influenced their ads to be about CNBC. What a smart move CNBC.

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