Google first made waves in the hardware market when it purchased Motorola in 2011 for $12.5 billion. A company on the scale of Google getting involved in hardware put some established manufacturers on edge, though anxiety abated when Google later sold Motorola to Lenovo for $3 billion.
Without being directly involved in hardware production, Google has continued to exert a huge influence over the market. Numerous hardware companies supported Android early on, helping it become the de facto alternative to iOS. Now, smartphone companies have no choice but to embrace Google.
The development sounding alarms throughout the tech world, however, is the recent launch of the Google Pixel smartphone. The stars truly aligned for the Pixel’s launch, with missteps from Samsung and Apple providing an ideal window for the new device.
The conditions are ideal for the Pixel to succeed. That thought should signal terror in the tech world.
Google has a near monopoly of the mobile operating system marketplace, with about 88 percent of the market, according to the International Data Corporation. In the same way Google first destroyed its search engine competitors, I believe the company is on a path to dominate the hardware arena.
Companies such as Samsung, LG, and others that have come to rely on the Android OS suddenly find themselves in a precarious position. They will have no way to compete once Google begins to give its own devices preferential treatment through software updates and new features. The last time Google attempted to break into mobile hardware with its $12.5 billion purchase of Motorola Mobility, Samsung seemed ready to jump ship from Android OS.
The latest shot across the bow of the smartphone world puts companies such as Samsung and LG in a terrible spot, likely forcing them to seek business outside of the mobile marketplace. HTC — the original equipment manufacturer of the Pixel — has already started to diversify its portfolio by entering the virtual reality space with its Vive.
Google’s products differ from competitors because the company can leverage the mountain of data in its ecosystem. The Pixel’s Google Assistant artificial intelligence surpasses Microsoft’s Cortana and Apple’s Siri by drilling down into users’ existing Google accounts to personalize every interaction. Google has snared billions of users with its intuitive and essential services, giving it an incredible advantage over competitors.
Some have dismissed the threat of Google’s hardware ambitions, pointing to legendary smartphone failures from Amazon and Microsoft. Others hope privacy concerns raised by Google’s growing digital hegemony will spark consumer backlash, hamstringing Google’s hardware push before it builds momentum.
It’s a mistake to see Google’s focus on hardware as a market disruption. The Pixel is primed to upend the mobile marketplace.
Google’s growing ambition
The Pixel smartphone is part of a pipeline of new Google products set to invade various verticals. Google Home will compete with Amazon’s Echo. Google Wifi is designed to make all other Internet routers obsolete; Apple recently ceased development of its own line of wireless routers. And the Google Daydream headset could quickly take over the nascent VR market.
Startups and established business alike should rethink their strategies in response to Google’s hardware aspirations:
Build a moat. No matter how unique you think your startup might be, you will eventually face competition from Google and other companies. File patents early in the creation process to protect your intellectual property and protect your company against duplication or displacement. Microsoft famously had to pay $290 million in damages to small Canadian company i4i after allegedly infringing on i4i’s patent by using an XML feature in Word.
Don’t become reliant. Many companies become vulnerable to Google because their infrastructure relies on the tech giant’s creations. Smartphone manufacturers had a choice between creating their own operating systems or outsourcing that work to Google. HTC, Samsung, LG, and others opted to embrace Android OS because it was the easy solution. Android-based phones have been successful for years, but these companies face an existential crisis as Google enters the hardware fray.
Independent development is a major undertaking, but it’s the only way to create something Google cannot. Smaller organizations can contract with a third-party developer if they lack the internal infrastructure.
Stay fresh. Google has deep inroads with customers via Gmail, YouTube, and myriad other offerings. The only way a competitor can hold out against Google is by offering unique products and bringing diversity to its lineup. You might be a hardware company right now, but you’ll need to branch out into software over time. FitBit, Skull Candy, and Blackberry have all learned this lesson the hard way. Focus on your organization’s core mission, and brainstorm new ways to meet that goal.
I believe the image is changing of Google as a benevolent tech giant more interested in innovation than monopolization. Companies would be wise to take steps to protect themselves from losing ground to Google, as the Silicon Valley giant is poised to dominate the hardware space for the foreseeable future.