Google selling hardware?
The search giant is testing a home entertainment device, but that may not be what's good for it.
Google (GOOG), the undisputed search giant of the Internet, is getting into hardware. The company, which has made its considerable fortune mostly from designing free software, is reportedly developing and testing a wireless home entertainment system.
It is the first time the Mountain View, Calif., company is overseeing the actual manufacturing process in its entirety, according to The Wall Street Journal.
The new device, which is apparently being tested in Mountain View and three other cities, streams music throughout the home using a wireless network. More than 250 devices were scheduled to be tested, according to a Google filing with the FCC, Bloomberg reports. The wireless home entertainment system could even include Google-designed speakers. Video streaming could be next in the cards.
Google is also in the process of buying Motorola Mobilities Holdings (MMI), which makes television set top boxes and cellphones, clearing a path to more manufacturing and software-hardware linking.
And so, the Apple (AAPL)-Google wars are heating up. Already in the mobile market the competition is intense. Smartphones powered by Google's Android operating system have overtaken Apple's iPhone in market share, but the iPhone 4S is helping Apple to close the gap. Google is also getting more into selling content, such as with its Android Market, which competes with Apple's iTunes.
Apple, meanwhile, has countered with several moves of its own, including the voice-operated search service on its iPhones.
Who is going to win this war is an interesting question. Without a doubt, Apple has a long and indisputable experience in hardware. Its elegant product designs, combined with intuitive software, have been embraced by consumers worldwide. Along with top-notch marketing, retail stores and customer service, Apple has grown into the largest company in the U.S. (in market cap).
Google also has a long and indisputable experience -- in software. It has been extremely successful in facilitating the Internet for consumers while making a boatload of money from advertising. Yet even in software, not all of its forays have been successful -- some darn right embarrassing. And arguably, what's made its Android OS so successful is its partnerships with device makers. An attempt, now, to step out of its comfort zone may not bode well.
The difference between Google's and Apple's character, if you will, was recently highlighted by the New York Times. "The Google model relies on rapid experimentation and data." A few lines of code can change a Google software product immediately, and the cost of failure -- of which Google has had many -- is low.
Apple's physical world is very different: "The Apple model is more edited, intuitive and top-down." Before it launches a new product, it carefully makes sure all the components -- hardware and software -- work seamlessly together with a predetermined design.
Does Google need to change and become more like Apple if it wants to succeed selling hardware? Probably. Will it change? Probably not. That doesn't mean Google won't try its hand in hardware, though. It sure has enough cash that it can easily throw some of it into this "experiment." It's done so before. And as long as it remains a small experiment, investors might tolerate it. Otherwise, it must succeed or the cost of launching a failing product could be more than it bargained for.
Google needs to consider its strengths and decide whether this direction is best for it. Perhaps others are more fitting.
All of this techno stuff is going to make us crazy. Look at what happens when the power goes out, all of those electronic doodads stop working and people go nuts. Remember the last Blackberry outage? Now Google wants to add wireless music to our homes.........no thanks Google.
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Some investment advisers are entertaining that possibility, especially in light of Monday's triple-digit loss in the Dow.
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