Google’s decision to become a full-fledged, vertically integrated device maker — controlling and blending together hardware, software, and ecosystem design — may one day seem inevitable, obvious, or even a little late. But in the short and medium term, it’s a huge, bold move that will pose new challenges for the other major players in the tech industry.
That’s especially true because the company made it clear that the array of new Google-made hardware devices it rolled out yesterday — especially the new Pixel phone and Google Home intelligent speaker — are important vessels for the technology it believes is the key to the entire future of tech: artificial intelligence.
Google’s hardware is a vessel for AI
Every tech company is stressing AI, by which I mean various ways of making machines smart about people and the world, and almost human in their ability to help, and to converse with, people. But Google believes its version, called the Google Assistant, has the power to win that race, even if it concedes the contest is just beginning. And, to do that, it decided, it had to be in control of the whole device.
Almost a year ago to the day, I wrote a column laying out five reasons it was time for Google to make its own hardware. I missed the AI angle. Google didn’t.
The company’s CEO, Sundar Pichai, called AI "a seminal moment in computing" on a par with the personal computer, the web, and the smartphone going mainstream, at roughly 10-year intervals. "It’s clear to me," he said, "that we are moving from a mobile-first to an AI-first world."
But, even with AI merely in its infancy, Google’s move to becoming a full-fledged maker of the most important consumer tech hardware is a huge deal. It will finally give the search giant the chance to match the advantages long enjoyed by the champion of vertical integration, its arch-rival Apple.
These advantages are legion, even if you don’t include AI. They range from better battery life, to more easily promulgated software updates, to new features that rely on both hardware and software. For instance, by controlling and integrating the design of the whole device, Apple has been able to make its iPhones, iPads and Macs do much more with seemingly lesser specs again and again. It’s a big reason why, even in a world long conquered by Google’s Android platform, the iPhone has been the leading phone model, with a billion sold.
Now, that may change. But Apple isn’t the only company affected. Here’s a quick, early look at how Google’s pivot will pose challenges to the big tech companies.
The world’s biggest tech company finally has a fitting rival. For decades, it has battled mainly software platform makers (Microsoft and Google) which had to depend on unrelated hardware partners to showcase their technology. And with hardware makers (Dell, Samsung) which had limited ability to integrate and make the most of others’ software. In the last 15 years or so, it’s done brilliantly in that matchup. Now, it will face a smart, rich rival that aims to do it all.
Apple squandered its early lead in integrated AI, with Siri, which still is clumsy so often that many just ignore it. It has similarly lost its early lead in music, waiting too long to embrace streaming and depending on hardware integration to make Apple Music an easier path for iPhone loyalists than Spotify. Another early advantage, its AirPlay system, which beams video and music to TVs and speakers, seems to have been forgotten in recent years, while Google’s Cast system is integrated in speakers and TVs from a variety of other manufacturers and a centerpiece of the new Google Home connected speaker.
Apple has never had a competitor quite like this new Google
And Apple’s excellent cloud systems for distributing photos, music, messaging, and other content across its phones, tablets, laptops, and Apple TV will also be challenged by Google, which showed off a bunch of cross-device integration for its new products.
Also, while there are reports that Apple is building a standalone AI and speaker device, Google is actually launching one.
Simply put, Apple has never had a competitor quite like this new Google. That doesn’t mean the iPhone maker will lose. It’s still an amazing company, with great products — Google’s new Pixel phone looks a lot like the iPhone, and Google’s campus is filled with Macs. And it has many hardware advantages Google will have to work hard to match, from a superb supply chain to hundreds of stores that not only sell, but support, its products. Oh, and iPhones are sold by all carriers; the Pixel is Verizon-only.
But Google’s pivot does mean that Apple will have to step up its game, on multiple fronts. That’s a good thing for consumers, but a major challenge for Cupertino.
I believe that one reason Google is becoming a hardware maker is that it had become too dependent on Samsung to showcase and sell the full Google app-equipped version of its Android software. There are hundreds, maybe thousands, of device makers using Android. But the Korean giant has been the only one to combine significant global market share, profitability, and a huge marketing budget. And, its priorities haven’t always meshed with Google’s.
Now, Samsung will have to compete with its software supplier in the lucrative premium smartphone market, where Apple has been its only real rival.
This couldn’t have come at a worse time for Samsung
And this development couldn’t have come at a worse time for Samsung, arriving on the heels of the huge recall of its flagship Note 7 phone because it shipped with batteries that caught fire or exploded. That recall, still underway, has damaged Samsung’s brand, and now Google is giving Android fans what looks like an excellent alternative.
Google’s new Daydream virtual reality system, which makes use of the new Pixel phone, looks like a strong challenger to Samsung’s Gear VR product, which is based on Facebook’s Oculus platform. Daydream is cheaper, has lots of content because Google owns YouTube, and Google is giving the headsets away for a limited time with Pixel preorders.
Like Apple, Samsung can’t be counted out. Its top phones are beautiful, it has lots of hardware chops, and it has its own mobile operating system called Tizen, which Samsung executives have privately described to me as a sort of Plan B if things became too difficult with Google.
But Tizen today is no match for Android or Apple’s iOS. So this is a bad week for Samsung, on top of a bad month. It could turn into a bad year.
Amazon has been a hugely successful, widely admired, diversified company. But hardware was never its strong suit after the original, and still popular, basic monochrome Kindle reader. Its tablets are meh. Its smartphone flopped. That all changed when it brought out the beloved Echo, the first successful standalone intelligent speaker, backed by its Alexa artificial intelligence system.
The new, much less costly Google Home, which integrates with other new products Google rolled out, is a huge challenge to the Echo and to other devices that use Alexa. Home is backed by the Google Assistant, which has the potential to be much smarter than Alexa, and it’s better integrated with the rest of the Google ecosystem — it can cast audio and video to other Google Cast devices, for example. Amazon is still very much in the game, but, if Google Home proves as good as promised, it could give Amazon a major competitor with even deeper pockets and much more machine learning data to use.
Microsoft is largely out of the phone business, and it has made AI a huge priority, backed by a deep research team that’s the envy of the industry. But even the Redmond giant will be affected by the Google moves. Its Cortana AI assistant is just getting traction. It makes its own integrated hardware in the Surface line, but sells very little of it, and still depends heavily on the old model of selling Windows and Office to other companies. It doesn’t offer a standalone intelligent speaker. At the very least, the new Google will cause some serious rethinking in Redmond.
Facebook and Google are head-to-head in VR
Facebook isn’t a hardware company... yet. But it did swipe Google’s brainy, impressive Regina Dugan, known as a hardware research and development expert, a step that has given rise to speculation that hardware is in the offing at the social network giant. Like everyone else, Facebook has doubled down on AI, and like everyone else, its AI efforts are in the first inning. But Google’s integration of AI into a range of hardware could well cause people to simply say "OK Google" into their devices rather than dig down to use Facebook’s intelligent bots. And Facebook owns Oculus, which is an early leader in VR — so Google’s Daydream platform puts the two companies in a head-to-head fight for the first time in a few years.
The tech world hasn’t exactly been turned upside down now that Google has become an integrated hardware maker. But it will be shaken up. And, by embedding AI into hardware it controls end to end, Google is pushing even more boldly into the future all of its rivals agree is vital. Everyone will have to decide how to respond. And while the competition might ratchet up the fanboy wars, it’s ultimately a good thing — the rest of us consumers will be the winners.