Google is playing the long game with its hardware company acquisitions

Made by Google sign at CES 2018
Made by Google sign at CES 2018 (Image credit: Android Central)

Google has a tech addiction. Like many who suffer from the same affliction, it has a drawer filled with all the things it has bought but never used except its drawer is filled with corporate ownership papers instead of boxes and cables.

Look back at Google's recent purchases: HTC hardware engineers, Nest, Motorola, Fitbit, bits and pieces of Fossil, and now North. Google has shelled out billions for these acquisitions and we've not seen much change on the consumer-facing side because of it.

We expect more every time Google buys another company. Sometimes we don't get it.

I'm not saying any of these purchases were a bad idea, I'm just saying that things like rebranding Nest products into "Nest by Google" or not having a third party oversee the manufacture of Pixel phones isn't exactly what we expected when we heard Google had bought yet another hardware brand.

I'll go a step further and say that some of these acquisitions made perfect sense, like buying Motorola's hardware division and smartphone-based patent portfolio, for example. It was us expecting more that made it all seem like a letdown. Someone inside Google's management carefully considers all aspects of a deal before it happens and we can only play armchair quarterback.

But a look at what exactly Google now owns and a little thought about what Google sees as the future of computing and the internet can help us piece together a strategy that it has surely already thought about — an entire ecosystem of mobile, wearable, and smart home products that are so good people will want to buy them.

I think that has been the plan all along. When you have billions to spend, you can play the long game. Google has more than a nameplate from these purchases. It has what is most important: ideas and people who can make them a reality. Google needs to make the next step happen itself instead of depending on partners and it has the pieces to do it.

Smartphone Market Share

Source: IDC (Image credit: Source: IDC)

Android is a bigger success than even Google anticipated because of hardware partners. According to IDC, Apple makes around 15%of the world's smartphones and companies that use Android make up the rest. That's a lot of Google in a lot of hands, but because the market is so one-sided, Google has to play by special rules or end up in court for abusing its dominance. And Google almost certainly doesn't like how it has to operate when it comes to smartphones.

Google needs to get the right people with the right ideas if it wants to succeed under its own brand.

How to fix this is pretty simple — don't depend on companies like Samsung to distribute your next great idea. The problem is that Google is really good at writing software to do just about anything once the initial bugs are ironed out but so many other companies are better at building hardware. For Google to make sure it is on your face, on your wrist, on your coffee table, inside your heat and AC system, in your car, in your laptop bag, and in your pocket it either has to get good at building things or let other companies help decide how it is going to happen.

Look again and the companies Google has purchased while thinking about something everyone is certain will happen: Google is also going to start building its own chips. Google Glass 2 and a Pixel Watch are almost certainly going to happen, but more importantly, to Google at least, your smart and connected home is going to be built from Google's own products. Smart Wi-FI, smart locks, smart lighting, smart window blinds, garage door openers, washing machines, refrigerators, you name it. Every appliance or other mundane thing you own can be made better if it is automated in some fashion and Google Assistant is a platform that can bring everything together.

Google isn't like someone who wins the lottery and is broke in a year. Financial experts work with all branches of the company to buy exactly what Google thinks it needs to be even more successful. Google isn't dumb and is playing the long game.

Jerry Hildenbrand
Senior Editor — Google Ecosystem

Jerry is an amateur woodworker and struggling shade tree mechanic. There's nothing he can't take apart, but many things he can't reassemble. You'll find him writing and speaking his loud opinion on Android Central and occasionally on Twitter.

  • I think the hardware game is just much more difficult and capital intensive by nature, and having a good product alone is not sufficient to guarantee success. You really need to be all-in to succeed on a large scale. For example, in the Android world it is very difficult to differentiate your product on quality alone because they all run the same OS and apps. Many break into the market with brute force via low prices for high tech (Chinese OEMs like Huawei, OnePlus, Oppo etc.). I also find it fascinating to observe that among the consumer masses, Samsung for example may actually have a stronger brand as a phone maker than even Google itself (Pixel), although they both run Android. I won't be surprised even if LG also has a stronger brand than the Pixel. And they all make really good phones, so it's not like any one of these companies is a slouch in the game. It is not easy to break into established markets without some huge unique advantage and long commitment (e.g. Huawei with vast funds and the Chinese market). If Google really wants to be a true hardware company (not partially like they've done till now imho), then they need to go all-in: low prices for top specs, no-holds flagships, consistent annual releases at multiple price tiers, big-time marketing. If they do not do these things, their hardware will remain small-time side projects they do just for fun because they do not directly need it for growth or survival.
  • Well, that read like a lousy investment research note... But ok. Keep it simple... Anything done on the hardware side by Google is to support the selling of ads. Google bought Fitbit (a big if, it's in the courts) for the health data of Fitbit users, so it could better target ads. Google is an advertising company doing what it does to target and sell ads.... Nothing more. No hardware venture by Google will ever come close to its ad revenue. This blog only exists to sell ads too, with very questionable reviews. AC's incessant push of Google hardware, the Pixel (which neither does flagship or mid or low range Android phones well) is case in point. I'm bored, that's why I commented... There is the odd bit of news that keep me from deleting this app. On a Windows PC, the ad content makes the site almost unreadable.
  • I was with you until I read this:
    "Every appliance or other mundane thing you own can be made better if it is automated in some fashion"
    More often than not it's not executed properly and becomes a "giant tech black hole throw away pain in the posterior device"
    Try driving my wife's BMW, what a disaster. Just to adjust the climate controls you need to be an engineer. The problem here is that we're in an era of over-engineering that just makes things more complicated than they need to be.
    So when I here we need to inject more technology into devices I become skeptical. Our double ovens went up on us the other day, guess what...needed a new circuit board, $500...puhleeze. The second time it's done that. Now they don't make them anymore and we'll have to get new ones...gimme a break, just put in a friggin switch like they did years ago and this pointless exercise goes away.