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.

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    Obi

    The only tech company out there with a reasonable mix of software and hardware revenue is Microsoft.

    Good cloud business, hardware, etc.

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    Ezequiel Chavez

    CNBC Is not happy because google sell companies a much better Add prodoct than them, and still taking more and more of CNBC market share in terms of adds. Try harder CNBC!

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    David Martrano

    I like the new pixal phones but their hardware can't compete with the likes of Samsung or Apple. With all the $$ they have they should have the best phones on the market. But once again they fail in this department. Take the base model pixal a 2800mamp battery with a 90hz display & equipped with soli-radar. These features definitely drain a pitiful battery. The XL is very good but not for 1,000 dollars for the 128gb model. Plus they charge you an extra hundred for more storage. Their both a very expensive proposition for what's offered. Very good review!

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    Nine Hundred Dollar Luxury Yacht

    If they would try to be something other than an ad company, I might buy their hardware (and then they could feed me ads through it) but the devices fall so far short of their potential, they are garbage. Why can't I tell my phone "this location is the grocery store", and have it remind me that I have a grocery list whenever I move to within a half mile of the stores location? Nothing like that is possible for me, but they target me with ads from businesses near where I am. The phone serves them, not me. Stupid AI. I turned mine off.

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    B Dahl

    We were forced to buy Crome books in our school system.When they get home my children set it aside and get on there Mac books so the school doesn't know what they do at home.

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    Mike Ivsin

    1. Google wants to innovate but follows Apple
    2. Their adds are sickeningly politically correct
    3. Google caved in and is censoring Flat Earth and Patriot movement on YT. Unforgivably unAmerican

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    Derek Land

    Same reason they give away Gmail and then snoop over your shoulder and index what mail you receive, read, and click on.
    If there's no cost for the product, you are the product. It's ironic that everyone persecutes and hates Facebook for snooping, but at least with Facebook you have to opt in. With Google, they track you whether you opt in or not.

    The CEO even bragged in an interview once that Google knows more about you than your own spouse.

    Then they tell the public they care about open source, free information, and privacy.

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    LogicTech

    google built over the years a mega data collection company – and this data is worth a lot today and will be worth more in the future

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    DoNot Need

    I use Maps and YouTube. The rest of the apps on my phone from Google I don't like and therefore don't use and are disabled or uninstalled. I mostly use my laptop for emailing because it can do things an app can't. My first smartphone was a Windows and I still prefer to use Microsoft apps. If Windows was still being supported I'd still be using one of their devices.

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    Don Gillies

    Google is a top-10 computer hardware maker ON EARTH. You fail to realize that they design and build the CPU cards and network cards in their datacenters. That business is probably $20B+ per year. Their success in B-to-B hardware makes them think they can compete in consumer hardware. We shall see.

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    Tigerex966

    Google is Cheap, they want to big of profits (apple level), but unlike Apple they do not have a monopoly on android phones.
    Apple can get away in 2019 with 64GB on $1100 phones, LCD on $700 phones, and being about 2-3 years behind Android flagships in features in hardware.
    Google is software focus, not hardware focus, so it get mediocre hardware year after year.

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    Foued Bendaya

    I laugh when they talk about struggle when the real struggle is not making a company from nothing to a billions dollars company

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    eddie pearson

    they create hardware to get info to make the services they let you use for FREE, better. It's pretty simple. The hardware business is a deadend if that's ALL you rely on.

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    mboiko

    Hard to believe what a headstart Nest had in the smart Thermostat market and how much Google squandered that lead. Now Ecobee is considered first before Nest, in that product segment. Google should be way ahead of Amazon in the smart speaker market by now…but they aren't.

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    Vladimir Obradovic

    People are worried about Google and their privacy in homes, yet they buy an Amazon (read Alexa / Ring, etc.) device.

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    Smokeyy

    the pixel , aside from the red phone, is the only smartphone to ever be worse than the iPhone in specs*software*price^-1. i still dont understand why americans still buy iPhones if there´s something worse available…

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    Origen17

    Yikes – millenial reporters are the worst. Ending every sentence with an upturn and overuse of the word "like". How far journalism has fallen.

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    Christo

    New Headline 'Google blindly follows Microsoft to make hardware, putting their logo in the hands of more disappointed consumers'

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    Panthera

    Why need that movement sensing tech to switch pictures? Madness! Waste of battery power and resources for chips. Use fingers… Simple. Earth has limited resources, we will be in a massive problem in next 20-40 years for energy and resources!

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    Carlos Vera

    Google hardware is made up of wannabes that want to be flashy to the public without actually knowing anything about high quality hardware designs, neither putting themselves into the customer’s experience. That is why their products are half baked and the quality is just not there. Including their software. If you think your money is worth an experiment for Google buy their products otherwise, not worth what they want to charge you. They should pay the users to use their products.

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    Jason Carmean

    I have solved the JonBenet Patricia Ramsey case, Diana's crash and 9-11 espionage October of our year 1996. Accurate military grade numerology its piracy all three crimes originated from 'Nettwerk One Ltd.,' Medias. Donald became a obstacle to their speech our year 1988. I am '@itcanbeseen' that 'Whistle-blower' on Twitter, https://www.twitter.com/itcanbeseen, Adam Schiff campaigns to omit my literature today over my past communication with Adam Schiff over the 1992 Los Angeles, California riots origin secreted Henry Rollins participated in campaigning criminal code a 1990's music industry utilized as a catalyst behind the riots' childhood subject purged onto television over Timken Research frequency optical sensory illegal surveillance of my childhood, monetized a Mossad orchestrated a second atonement, I prepared each month I have is audibly archived on https://www.huetonemediae.com. Keep my Autism sacred, keep me from off the streets and keep my testimony alive!

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    Andi Min

    Pixel 4 is a 💯 complete desaster. In short words: big bezels, ugly Design, dim display, small battery, small base storage, no SD 855+, no UFS 3.0, no front facin speakers, no 4k60fps at rear, no 4k at front, no wide angle cam, limited 90 Hz, small RAM, Very bad RAM management, useless motion sense, insecure face ID, Very very very bad build quality, cracking hardware, no earphones INda box, no free cloud storage, high price.

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    One Me In Myself

    So according to this video Google collects my data when I use google apps on my OnePlus phone or my Huawei laptop and that is why they build their own hardware… What?
    Video should've been called "Google makes money by collecting your data". but i guess that we already know

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    Yamichu

    Can confirm google spys on you even if you Google Pixel is on sleep, my friend would talk about Inital D when I'm with him and I would then receive Advertisements pertaining to said topic within 10min of talking about it.

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    RealComp5

    Google should drop Chromebooks. The only people who get Chromebooks are teenagers who got them as a gift from their grandparents who thought it was a normal laptop. No one who has a Chromebook is happy about it. It's definitely a stain on google's hardware business.

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    Angel Littleton

    I won't buy any Google hardware because they can't be trusted. Think about people on YouTube that had their entire Google accounts banned for something on YouTube. Now imagine Google leveraging their hardware in situations like this. No thanks. Google definitely does too much evil for my taste.

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    Warholamo

    My grandfather has a chromebook, my father got it for free when they were still just netbooks. He still uses that damn thing today.

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    Микола Моргун

    6:50 I’m wondering whether these are the actual factory workers, because they are Caucasian and look more like models… Those phones would be so expensive

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    Daniel Hernandez

    The Pixel series of phones could be better. Google can either learn from their mistakes, enlist the aid from other companies, or stick to software. In an ever-competitive market for the latest tech, cross-shopping Samsung and Google for phones seems like a no brainer because Google undercuts Samsung. Then OnePlus comes along and all of a sudden, Google is overpriced.

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    Pablo Aguilar

    Google isn't taking their phones serious, that's all. We, Android community, literally tell Google what we want on a phone and they give us something else. I still use Google products cause it already knows me. We live in the internet age and there's no point in running away or trying to delete everything you do. I don't mind them making money off of me just to give me better advertisements because I actually find them useful in things I want to try out and buy. I know it sounds bad or like I'm brainwashed but, I really would rather get ads that I can relate to instead of ads about back pain, medical pills, or gold coins…

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    G.P. Kim

    The finish or features of their products are nowhere near that of an apple and samsung but the price is.
    Problem explained,End of the story.

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    The Pharmacy Bank & Trust Company

    The hardware collection they have today is nothing compared to where it will be in 2030. Just one more decade to decade hardware cycle roll out as oppose to their dominance in decade to decade software cycles, and it will make more sense to everyone.

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    Wilhelm Sarasalo

    Microsoft and Apple also do hardware, Amazon tries, too. If you want to rely on third parties to build hardware for your platform, competing against them would not be so good, but setting an example would be. So, high quality, high price would make sense, but not direct money. The early Pixel Chromebook was certainly that.

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    Rod M

    Lots of legal issues here. We never consented and the acceptance the legality of any EULA is questionable. In effect these agreements are worded where you have no rights and they have all. In addition, no ads can be served to anyone without the explicit agreement in writing between both parties, and all terms and conditions must be viewable BEFORE a single ad is served – no contract no ads.

    A magistrate from a court in Munich, Germany was dealing with Axel Springer vs Eyeo GmbH (maker of AdBlock Plus) and stated "The Süddeutsche Zeitung ruling came through in a Munich court. The judge said it is perfectly legal for people to install ad-blockers in their browsers as publishers have no contracts with their readers that insist they have to look at the ads."

    The ‘implied contract’ theory that we’ve agreed to view ads in exchange for free content is void because we can’t review the terms first — as soon as we follow a link, our browsers load, execute, transfer, and track everything embedded by the publisher. Our data, battery life, time, and privacy are taken by a blank check with no recourse.” Every time you visit a website with an ad, it's an implied contract, but since you cannot view all the terms it's void and cannot be enforced. However under contract law, the only valid contracts are those signed in ink and both parties. Something you cannot do online, and these "bluff statements" like "by continuing to use this site you agree or our terms and conditions" are not legal either.

    Oh BTW another 559 ads blocked during the writing of this comment.

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    Chris B.

    Despite the struggles I've had mostly good experiences with Google's hardware. Battery and price aside (and I personally have no problems with my battery life) but the Pixel 4 is a fantastic piece of hardware. Both of my Chromecast work as advertised and have been a fantastic addition to my home. The Google Home mini is also a nice touch.

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