Google’s Pixel phones and Pixel Watch aim to sell you software

This article was first published in Yahoo Finance Technology, a weekly newsletter highlighting our original industry content. Get it straight to your inbox every Wednesday before 4 p.m. ET. Subscribe

Wednesday, October 5, 2022

Google sells you its hardware

Google (GOOG, GOOGL) is set to unveil its latest Pixel 7 and Pixel 7 Pro smartphones and its first-ever smartwatch, the aptly named Pixel Watch, at an event Thursday in Brooklyn.

The show is expected to be filled with plenty of talk about how Google’s artificial intelligence makes its hardware superior to offerings from rivals like Apple. Plus, the Pixel Watch will give the tech giant a chance to show off what it spent $2.1 billion to acquire Fitbit in 2021.

But, experts say, Google’s hardware strategy isn’t about sticking with Apple (AAPL) in terms of sales or trying to outperform its ecosystem partner Samsung. Rather, it’s about showing global manufacturers what’s possible when you combine the right hardware and software.

“I view Google hardware as a loss leader,” Tuong Nguyen, principal analyst at Gartner, told Yahoo Finance. “They don’t build hardware for hardware’s sake. This is to showcase their own services and capabilities.

An additional bonus? Google’s hardware encourages more users to sign up for its services and allows it to collect more data about how consumers use these platforms. After all, the more Google understands how you use its features and the more data it can collect about your web searches, the better it can target you with ads.

Google has been releasing its own smartphones since 2010, but it’s still nowhere near as popular as Samsung, which controls 21% of the global market, or Apple, which has 16% of the market, according to Counterpoint Research.

Google CEO Sundar Pichai. (AP Photo/Eric Risberg)

And that not only helps Google, but possibly the likes of Samsung and its Android cohorts, while making it look like Apple is standing still – at least when it comes to software.

Google leads with software

Previous Google Pixel phones never stood out in terms of overall performance. Their cameras, at least component-wise, didn’t match Samsung’s or Apple’s. It’s Google’s software capabilities that shine.

When Google introduced its Night Sight software for the Pixel in 2018, its low-light photos blew the competition away. Google was operating on a whole different plane with its powerful software.

Google pushed other software features over the next few years, including calling features that navigate automated call center lines for you and deep integration with Google Assistant. But Google doesn’t roll out these software updates to show companies like Samsung using Android to power their devices. Instead, Google is trying to demonstrate the full potential of Android devices.

Google products, including the new Pixel 3A phone, are shown during the Google I/O conference at the Shoreline Amphitheater in Mountain View, California on May 7, 2019. (Photo by Josh Edelson / AFP) (Photo credit should refer read JOSH EDELSON/AFP/Getty Images)

Google’s Pixel line has been around for years. (Photo by Josh Edelson / AFP) (Photo credit should read JOSH EDELSON/AFP/Getty Images)

“It’s about demonstrating how the Android experience can be, or this is how the Wear OS experience can be, and that’s how they can all work together in concert,” Ramon Llamas, research director for mobile and AR/VR devices at IDC, Yahoo Finance told.

Google isn’t the only company taking this approach. Look no further than Microsoft (MSFT) and its Surface product line for a major software distributor that has built its own hardware to showcase its offerings. The company is offering its own laptops, laptop-tablet hybrids, foldable smartphones and hybrid all-in-one desktops at a premium price, in a bid to demonstrate what Microsoft has to offer.

Each of these, except the Duo, shows how a clean design language paired with Microsoft’s Windows 11 operating system can combine to create some truly desirable PCs. It worked too. Companies ranging from Dell and Lenovo to HP and ASUS produce sleek systems and you can, at least in part, thank Microsoft for that.

It’s not just the looks either. Google’s Tensor chip, designed specifically for the company’s AI-powered software, is also part of the equation.

“It’s about setting an example for other providers,” Nguyen explained. “In this case, it’s the vendors that use Android. The whole Tensor chip, I think it was an announcement to say, “Hey, that’s why you need a dedicated AI/ML chip in a personal device.” ”

The Pixel Watch is expected to follow the same formula, giving users a solid look and feel with software intended to elevate the Wear OS brand and get third-party hardware partners to think more about how Google’s software and their own hardware can merge in different ways. new and interesting way.

More data for Google

Of course, Google is first and foremost an advertising agency. And it aims to entice more consumers to use its variety of services to ensure the Silicon Valley giant has plenty of data to target you with ads.

That’s why Google loads third-party Android devices with its Maps, Gmail, Google Search, and Assistant apps. It’s also why Google paid Apple between $8 billion and $12 billion starting in 2020 to keep Google as the default search engine on its Safari browser. And putting these apps on its own handsets makes it much easier to reach users.

It’s also a way to make sure you stick with Google for the long haul. Just as Apple and its vast ecosystem of apps and devices keep users hooked to its platforms and services, Google wants to give you a reason to stick around.

By Daniel Howley, technical writer at Yahoo Finance. follow him @DanielHowley

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, instagram, Youtube, Facebook, Flipboardand LinkedIn