Business

Google (still) wants to be the new Apple

By Oliver Smith 21 September 2017
Image: Getty/Justin Sullivan / Staff.
Summary

But it’s not there yet.

Buying a new smartphone? Google desperately wants to sell you one.

But, for most people, Google or its Pixel brand barely register next to the giants, like Samsung’s Galaxy or Apple’s iPhone.

This morning Google revealed a $1.1bn deal with HTC to dramatically expand its smartphone business by acquiring some of the staff responsible for HTC’s smartphone business.

“HTC has been a longtime partner and has created some of the most beautiful, high-end devices on the market,” wrote Google’s hardware senior vice president, Rick Osterloh.

“We can’t wait to welcome members of the HTC team to join us on this journey.”

It’s the latest chapter of Google’s big, bold bet on becoming a major hardware manufacturer.

A new approach

As we pointed out last year, Google is changing its approach to the smartphones and devices that it used to rely on hardware partners to create. Namely, if you want something done well, do it yourself.

It’s a strategy that might be causing some serious doubts for those partners like Samsung and Huawei, which continue to rely on Android to power their multi-billion pound businesses.

At the same time, Google knows hardware is key to its future, with smartphones, virtual reality and connected home appliances all increasingly relying on a close partnership of hardware and software.

A partnership that Google’s pretty bad at.

Hardware is hard

This isn’t the first time Google has splashed the cash to try and get ahead in the hardware game.

In 2012 there was the disastrous $12.5bn takeover of Motorola, part of an ambitious plan to instantly transform Google into a hardware giant.

The plan quickly fell apart and Google ended up selling most of Motorola to Chinese tech giant Lenovo at the fire sale price of $2.9bn.

Ditto with its $3.2bn takeover of smart thermostat maker Nest, since the deal in 2014 Nest didn’t launch any new flagship devices until this week when it unveiled a smart burglar alarm.

The future? Google it

The big questions today are around whether Google’s HTC deal will fare any better.

Will Google’s enlarged smartphone team be able to create cutting-edge devices with unique hardware (like Apple’s iPhone X facial recognition and augmented reality skills) without alienating partners like Samsung and Huawei?

And even if Google manages to knock it out the park with a gangbusters smartphone, will consumers even notice given the company’s dire track record when it comes to branding and marketing?

If not, then Google might simply be throwing good money after bad, and not for the first time.