Why is Google Making Phones, Anyway?
Mark Lowenstein
Managing Director, Mobile Ecosystem; Founder and Chief Running Officer, Great Runs
This is an excerpt from a more complete column in Techpinions. Read here.
Google-branded phones own about 1% share of the smartphone market, have limited carrier distribution, and won’t make real money for several years. Amazon and Microsoft both tried, and failed, on phones. Even Google’s initial phone foray, with Motorola, was a bomb.
So, why is Google making smartphones? In fact, they just doubled down, acquiring HTC for $1.1 billion (a bargain) and introducing two new Pixel models.
The historic argument was that for Google, the more screens on which to view Google ads and do Google searches, the better. But Google is getting plenty of traffic from iPhone as the default search engine on iOS, as well as from Android devices. So selling a few million Pixels won’t really make a material difference to Google’s mobile search business.
My view is that Google’s commitment to being in the phone business is part of a broader strategy, with three central elements. First, Pixel phones are necessary to some things that Google wants to accomplish in the wireless and connectivity arena, experimenting with Wi-Fi, the unlicensed band, shared spectrum, and 5G.
Second, being more directly involved in phones is important to Google’s AI push. There are things they can do on their own devices that they can't on iOS or Android phones powered by other OEMs.
Third, Pixel represents a relatively cheap way to do some public R&D around several initiatives. If you think about it, Pixel is really a big public beta. They can now use Google powered phones to test things from Project Fi to AR (Google’s ARCore framework is fully active on the Pixel 2), to some nifty tricks on Assistant, in a way that they can’t on other Android-powered devices.
With a relatively modest investment, at least in Big Internet Player terms, Pixel phones allow Google to be masters of their own Android domain, providing a walled-off mobile testbed for new capabilities related to connectivity, AI, AR, and other concepts.
For the full column, read here.
Director, NE Ohio Regional Improvement Corporation. ForthUtility.org community-led fiber initiative volunteer.
6 年It all comes down to the data and knowing how to capitalize on it.
Mark, I like it...it doesn't have to be profitable. Primarily for the third reason you stated. It's a great way to get others to participate in your Beta on a large scale and, with respect to any loss on the handset side, chalk it up to R&D investment and capitalize it.
Owner, Duane Hartness Insurance Agency, Inc.
7 年If Pixel 1 is an indication I expect Pixel 2 to gain market share particularly if they address production constraints.
Telecom Sales Executive (On Permanent Sabbatical)
7 年Good luck Google....you're gonna need it!