Google's not even playing on the same field as Apple

Rick OsterlohGoogleGoogle hardware chief Rick Osterloh

Google held a splashy press event in San Francisco on Tuesday to unveil a bunch of new hardware, including a designed-from-scratch phone called the Pixel, a fabric-covered virtual reality headset called Daydream View, an Amazon Echo competitor called Google Home, and a home WiFi system known as Google WiFi.

Unlike Google’s past dalliances in hardware, this time all the products are under one division, led by former Motorola president Rick Osterloh, and they seemed more coherently tied together than ever before.

For instance, Google’s intelligent agent, the Google Assistant, shows up in both the WiFI connected “Home” speaker and in the new Pixel phone, although you activate it slightly differently — with Home, you have to say “OK Google” every time, while the Pixel simply lets you press and hold the home software button. The Pixels are the first (and so far only) phones to work with the Daydream headset. You can get a Daydream View and a base for the Home in the same off-white colour called “Snow.”

The products themselves also seemed solid when I tried them in Google’s demo area, although we haven’t had a chance to review them independently.

The Home smart speaker really does understand if you ask it to “play that Smashmouth song from Shrek,” or tell it to turn down your Nest thermostat — I was particularly impressed at how well it picked up our voice commands in a crowded and noisy space. The Pixel looks as good as any other high-end smartphone. The Daydream View may make you look like a dork (like all VR viewers), but it’s got some smart design touches, like the little cubby where you tuck the remote control, and it comes in some cool colours and is covered with a pleasant soft fabric.

Google Daydream ViewGoogleThe Daydream View and remote.

All that aside, I still think Google’s heart is elsewhere. Why?

  • Following, not leading. All the new products are like something else that already exists. The Pixel is like the iPhone. The Home is like the Echo. The Daydream View is a cheap VR starter kit, far less sophisticated (and far cheaper) than Facebook’s Oculus or Sony’s PlayStation VR. The WiFi is like Eero or any number of other startups — and in fact, companies have been promising to simplify WiFi for more than a decade. (I have a five-year-old Cisco Valet that promised simpler home WiFi, and it still isn’t very good, and I remember Microsoft’s brief-lived home WiFi routers in 2004 or so, which promised the same thing.
  • Google isn’t manufacturing the phone. Google designed it, it’s got some custom Google silicon in it, but the actual manufacturing is being handled by HTC — a phone maker.
  • We’ve seen this movie before. If Google were really serious about getting into the hardware business in a big way, why did it spend over $12 billion to buy a major phone maker, Motorola, in 2011 only to jettison that business to Lenovo less than 3 years later? As Larry Page said when he sold Motorola, “it helps to be all-in when it comes to making mobile devices.” Do we think Page has changed his mind?
  • No retail play. Where are people going to be able to test and buy these things? When Microsoft got into hardware, it opened a big set of retail stores. Amazon plans to set up as many 100 retail pop-up kiosks in malls, as Business Insider previously reported. Google’s retail strategy? Online and partners — you’ll buy these things at Walmart and Best Buy, alongside dozens of other products from every consumer electronics company in the sun. As far as support goes, online chat will attempt to take the place of the Apple Genius Bar.
  • Financials. Google doesn’t break out its hardware sales on its financials. If it starts, that would be a sign that it’s serious about this business.

Perhaps most telling, when Google CEO Sundar Pichai was talking today, he didn’t show the kind of excitement and energy he shows at Google I/O, the company’s annual event for developers. Pichai is a software developer; those are his people. He was most animated during a long diversion about about Google’s machine learning prowess in translating English to Chinese — a tough problem, but a software engineering problem, not a hardware problem.

Google event sundar pichai machine learning AIMatt Rosoff/Business InsiderSundar Pichai at the Google hardware event.

Google hardware boss Osterloh took pains to reassure the world on Tuesday that the company was serious about hardware this time and is in it for the long haul.

But in fact, the best part of these Google hardware products isn’t the hardware. It’s the software and services that underpin them — the brains behind the Google Assistant, the unlimited photo storage for the Pixel provided by Google’s cloud, the Daydream virtual reality platform that third parties will be able to use to create 3D content.

So this is not Google turning into Apple. It’s more akin to Google following Microsoft when it started doing hardware in 2010 to help show what Windows 8 was capable of on touch screen devices. Microsoft does take hardware seriously. It has some excellent designers. It’s making some very strong products and forcing Apple to respond.

But it’s hardware in service of Microsoft’s other products and its broader strategy of productivity everywhere, not hardware for its own sake.

That’s the template Google is following. Google’s broader strategy is providing access to all the world’s information, and selling advertisements against the attention consumers pay to get that information. Consumers or investors who think otherwise risk confusion and disappointment.

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