Google moves into hardware production with smartphone and other devices

Google moves into hardware production with smartphone and other devices
By Elizabeth Dwoskin and Craig Timberg
Oct 3 2016

Software giant Google is beginning an aggressive foray into hardware production with the launch Tuesday of a smartphone and other devices that will bring the company into direct competition with other leading tech firms, including its longtime partner Samsung.

The launch signals a major shift for one of the world’s most profitable companies as it seeks to adapt to a technology landscape increasingly dominated by mobile and other connected hardware. Google must find a way, analysts say, to keep acquiring user data for targeting ads as Web search — traditionally done from laptop or desktop computers — is supplanted by newer technologies.

Google’s new smartphone, the Pixel, will employ artificial-intelligence technology that users can converse with, allowing them to sidestep keyboards as they access online information and make purchases such as movie tickets, say people familiar with the company’s plans who spoke on the condition of anonymity to reveal information ahead of its official release. The company also plans to release other new hardware, including a voice-based assistant for the home to rival Amazon’s Echo and a virtual-reality headset to rival Facebook’s Oculus.

These moves push Google beyond its traditional comfort zone — industry-leading online portals for Web search, and popular apps for email and maps — and into the harshly competitive world of hardware design, production, sales and customer service in which the company has only dabbled. The company has relied on partners such as Samsung and Huawei to sell devices loaded with free Google software, including the Android mobile operating system.

“As people shift into these new patterns for interacting with the Web, Google has less and less reach,” said Benedict Evans, partner at the Silicon Valley venture capital firm Andreessen Horowitz. “They have you for Web search, but not for the other things that you increasingly do. This is both an existential and a strategic problem for Google.”

Google revealed their newly created-in-house phone, the Pixel. Take a look at its specs, Assistant, camera and more. (Google)

The launch of the Pixel — which was heralded this week by prime-time television ads during “Monday Night Football” and “The Voice,” as well as billboards and installations in London, Sydney, Berlin and New York — will test Google’s mettle in a new kind of business. The shift toward hardware also puts the company on a collision course with Apple, Amazon and Facebook, and with partners such as Samsung that have used Google’s free Android software to build their own global smartphone empires. Samsung’s Galaxy phones are the most popular high-end smartphones in the United States after Apple’s iPhone.

Despite a lucrative partnership, Samsung and Google have engaged in a tenuous tug of war in recent years, each trying to loosen its dependence on the other, said people familiar with the situation. Google in recent years has a spotty record with limited forays into the hardware market, including an effortsto sell its own line of smartphones, its purchase (and later sale) of Motorola and the release of troubled products such as Google Glass. Samsung, meanwhile, has gone so far as building its own mobile operating system and app marketplace, Tizen, as a hedge against the company’s dependence on Android.

Samsung declined to comment.

“Google’s challenge is that Android’s success has also been its greatest weakness,” said Jeffrey Hammond, principal analyst at Forrester.

The Android operating system is used by Samsung, Huawei, HTC and dozens of other manufacturers. But Google’s licensing deals with manufacturers — offering the smartphone operating system and the popular Google Play Store app marketplace to manufacturers only if they agree to bundle it with other Google apps — has generated antitrust scrutiny in Europe.



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