Why Google struggle's with hardware?

Google's mission is to bring a more helpful Google for you. Google's hardware businessis really confusing. It means creating products like these. They're like history, so confusing. You can almost like putfunny music to it. It considers companies like Samsung,both a partner with services like Android and a competitor withhardware like the Pixel 4. It has branded devices under Nexus, likethe Nexus One and Nexus Q, Chrome, like the Chromebooks and Chromecast,Pixel, like the Pixel 4 and Pixelbook Go, Nest, like the NestHome Hub and Nest WiFi, and its own name, like the GoogleHome and Google Glass. And only a few of these productshave gone on to take a successful share of their respective markets. Google's a real hardware competitorin some markets, especially when you think about education andlaptops with its Chromebooks. But in general, as a player againstApple and Samsung and phones and other places, it's not considered amajor player in this space. For a company with analmost $900 billion market capitalization, Alphabet, Google's parent company, just doesn'tmake a lot of that money from its hardware. But through acquisitions, partnerships,internal design and developments, Google has stitched togethera product line that makes the company's complete visionhard to see. So if the company can't rely onhardware as a major source of income the same way Apple and Samsungdo, what is Google's ultimate goal? The hardware's true sort of value isthe fact that it helps Google collect information that can be usedfor advertising and then to serve you ads anywhereyou might be. I don't view Google as a hardwarecontender because at its core it's an advertising company. It's easy to miss Google's hardwarestrategy in its current lineup. Google says it wants to createproducts 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 twoof 2019, only about 16 percent came from Google's so-called"other revenues" category, which includes Google's hardware sales, GooglePlay sales and cloud revenue. The vast majorityof that $38.94 billion income comes fromits ad business. Google captures 20 percentof all U.S. ad dollars, both online andoffline, and a whopping 74.6 percent of all U.S. search ad dollars. The hardware business has to serve therest of the business, which is an advertising business. Where it's collecting profiles, it'scollecting data on you. Looking at its history, Google has triedhard to clean up its product line, like Steve Jobs famously did whenhe returned to Apple in the 90s. But it's stillstruggling in general. Google creates its hardware inthree ways: through partnerships, through acquisitions and throughits own in-house efforts. Google's first big hardware partnershipswere thanks to its operating system, Android. When we talk about flagship bestAndroid devices, the Motorola Droid was really probably what put Androidon the map in the consumer's mind. In fact, to this day whenpeople talk about Android, you still hear them refer to it as droids. It wasn't the first Android phone, butit was the first Android phone that got a tremendous amount ofattention and drove a tremendous amount of sales. But the Nexus lineof phones signified a change in the way Google looked at hardware. So the Nexus line was originallydeveloped, sort of showing what you can do with an Android phonewith the latest version of Android. It was for developers to build theirapps for the platform so that partners in the Open Handset Alliancecould then launch phones based on that. The Nexus One only soldabout 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 totackle was the computer itself. Chromebooks used to be laptop-likeinternet terminals that Google developed during its shift tocloud-based computing and storage. Originally, these laptops just accessedthe internet via Google's Chrome browser, nothing else. Everything was stored on Google'sservers, even the applications. The hypothesis is that you werealways connected because at the time when they first came out, therewas very little storage on the device. You had to be connectedfor it to do everything. The first Chromebooks were manufactured bySamsung and Acer and got the products off to a rockystart, leaving reviewers wondering why Google made theseglorified netbooks. But by 2016, Chromebooks were outsellingMacs, thanks in part to their popularity in schools. In fact, Chromebook took 60percent of the U.S. educational market share by 2018. It was in 2012 that it really decidedto want to put a lot of money behind hardware. It acquired Motorola Mobilityfor about $40 a share for $12.5 billion, marking ahuge 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 LarryPage said the combination would offer consumers accelerating innovation, greaterchoice and wonderful user experiences. The biggest value that the company gotout of it was its patent portfolio so it can gotoe-to-toe with companies like Microsoft and Apple. Then in 2014, CEO Larry Page decidedthey wanted to get out of the mobility business and ended upselling Motorola Telenova for $2.9 billion, which was vastly lessthan what they paid for. $9.5 billion less to be exact. I can only classify the Motorolaacquisition as a complete bust. One of Google's most lucrative investmentswas in the company Nest, which was originally acquired byGoogle's parent company, Alphabet. That was sort of the start intothis home hardware foray and at the time it was justa smart thermostat. I mean, how many houses do youwalk into or apartments where the Nest is the featured element? With its eye still on thehardware prize, Google announced in 2017 that it would spend $1.1 billion on a cooperation agreementbetween itself and longtime partner HTC, a company thatpreviously developed several Nexus phones and even manufactured afew Pixel models. I believe this was a reactionto post, spinning off Motorola, realizing they didn't have enoughof their own employees or contractors to do what they needed todo, 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 absorbNest fully into its own lineup, making it no longer anindependent company under Alphabet. In 2019, Google closed a $40million deal with watch group, Fossil, and most recently, Googleacquired Fitbit for $2.1 billion. For smaller, more nicheprojects, Google turned inward, like with Google Glass, whichwas a wearable device. Kind of goes down and is infamousfor not really making much of a breakthrough in the market likethe company had hoped. Glass was advertised as a pairof augmented reality glasses that could provide users with turn-by-turndirections, read messages and emails and takepictures and videos. But the real-life functionality was muchmore limited due to its small battery. I personally went outand bought Google Glass and I was pretty sure at the timeit was going to revolutionize everything. The product was such a flopthat adopters of the glasses were referred to as "glassholes." Google really didn't understand thepersonal ramifications they would have on its users. That was very negative. Google discontinued the product for consumersin 2015, but they live on in the workplace. In 2016, it decided to reversecourse again and it made another aggressive stride into hardware. This gave way to incredibly successfulproducts like the Google Home, which was the most popular smartspeaker lineup in the United States in 2018. I think Google's bestperforming device is likely the Google Mini. And with this new Google-centricframe of mind, the company nixed Nexus to create its veryown Pixel line of phones, Chromebooks and tablets. They're not co-branded withpeople like Huawei or LG. The Pixel phones have been criticallyacclaimed, but pulled a dismal 2.25 percent of the smartphone marketin North America, less than Samsung, LG, Huawei andeven former subsidiary Motorola. I think when you see GooglePixel commercials and see the YouTube videos with millions of views, youmight get the impression that this is a huge phone and has avery vocal and dedicated fan base. But when you look at shipmentfigures around the United States particularly, it's not even among thetop five, although we've seen in past years thatthe Pixel is growing. So besides products like the GoogleHome Mini, now the Nest Home Mini, why would Google continue tosell hardware that is failing to bring in big bucks?The unspoken interaction or contract between the consumer and Googleis that I'm going to make these devices do amazing things, I'mgoing to know things about you so it's going to do things that Iknow you wanted to do and then we're allowed to advertiseback to you. Google knows a surprisingamount about you. Whether you're using an Android phone orjust use a bunch of Google apps like Google Maps, Gmail, YouTubeand Chrome, Google has built a profile for you that includesa lot of information. Google knows that Idon't have kids. Google knows that I work for avery large employer that has more than 10000 people. Google knows that I'ma renter, not a buyer. It does know some details thatyou probably know that you've never sort of explicitly told them, butit's inferred these things through all of your behaviors on Google. Google uses this profile to provideyou with more accurate search results and the like, but moreimportantly, 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 thingsare also collecting data on us. They also say that all of thiscollection is to just make your experience with theirproducts easier. So they want to be really relevant. They want to be fast. They wantto know that when you're talking to your home device that you want thingsthat are in your town or if you're asking for, you know, a pairof shoes that they're going to give it to you and your size. And Google isn't shy about the informationit collects or how it uses it. Just check out Google'sprivacy and terms page. It has a videoexplaining all of this. So it's very easy to find allof 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 tounderstand from a third-party player perspective what information they havecollected that has now gone out to these third party players. The network isprobably extraordinary. Now when it comes to software,there are few that rival Google. Android holds a huge majority ofthe smartphone market worldwide, and Chrome OS currently powers more thanhalf of the mobile computers in U.S. schools. When you look at phones, Android'sthe real winner here, not necessarily Google Pixel. When you look at laptops, it'sChrome OS made by Google's partners, not necessarilyGoogle's Pixelbooks. But when it comes to putting thatsoftware in every nook and cranny of your life through hardware, itgets a bit worrisome for consumers. It still has issues thatit has to overcome. It has to convince consumers thatit's actually serious about making technology and being inthe hardware space. It also has to convince consumers thatthey can trust them with being in the most personal areas oftheir lives and having hardware that will protect the user'sprivacy and security. It's hard to say exactly whatthe future will be for Google's hardware business. But one thing isfor sure: if you're using a Google product, you are helping Google sell you better ads.