Why the hardware business is becoming more important to Google

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Dusseldorf, New York Taking More Stars Than You Can See When Presenting New Products in New York Google the camera of his new smartphone Pixel 4 in the center. And who wonders why he should buy a phone from a search engine provider, may find the answer in the new features of the camera. At least on his smartphone photos he could discover the Milky Way in the future. The algorithms that calculate the starry sky make this possible.

The mobile phone business has become tougher. After years of increasing sales, they went back for the second time in a row in 2018. People do not necessarily want to have the latest model of smartphones, just like a few years ago.

This is also because the technology in the devices is at least for the moment largely exhausted. Therefore, some manufacturers are already relying on devices for the new fifth generation network, with which the mobile radio will be much faster. Google is trying to persuade the customers at Pixel 4 with new camera features for a new purchase. However, the tech group is not alone.

“The camera has become the main distinguishing feature,” says Annette Zimmermann, analyst at market researcher Gartner. Each manufacturer tries to stand out on the camera from the others. According to the expert, this trend is driven by two sides: “On the one hand, a great camera is a great added value for the users, on the other hand, no manufacturer can escape the competition.”

But convincing customers is not easy, remarks Pa Foresight analyst Paolo Pescatore: “It has become increasingly difficult for manufacturers to differentiate themselves in this tough market,” he observes. The recent problems of Huawei – the phones may no longer have Google software – customers could theoretically change the provider. “But it will not be easy Apple– and SamsungCustomers, “Pescatore points out.

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The camera in the new pixel has two lenses for the first time and can zoom in even more than the sky. The search engine group is also proud of the ability to edit images before they snap. The user can take pictures of people in backlight. In addition, algorithms correct the color. In the future, snow patches should be white instead of bluish.

The accolade Google gave the Pixel 4 of none other than Annie Leibovitz. The star photographer, famous above all for her portraits, spent several months traveling around the country photographing people. “I was very skeptical at the beginning,” she explained on stage in New York. “But I was curious how far you can get with a smartphone camera.” Pixel 4 convinced her.

Low market share for smartphones

Since Google released its first smartphone in 2016, observers are wondering what the company really wants with its hardware in general and its mobile phones in particular. A statement: The US company wants to drive the smartphone manufacturers who go with Google's Android operating system on the market.

Frank Gillet of Forrester, a technology-focused research firm, describes the Pixel as a “beacon-android-smart-phone”: On its own devices, Google shows what's possible with Android and challenges the competition to become even better. Google wants to prevent customers turn to manufacturers who rely on Windows operating systems or switch to Apple with iOS. But that's not enough anymore, says Gillet.

Google now wants more, Annette Zimmermann is sure of Gartner: “Google is trying to close its gaps in the portfolio.” As the group two years ago, the design team of HTC brought into the house, this claim had become apparent.

Hard- and software have to go better and better together, Google can do that for themselves. “The strategy is to cover the entire hardware bandwidth from the smallest wearables like the wireless headphones to the big notebooks,” says Zimmermann.

But the way for Google is still far to go to serious hardware manufacturers. In terms of smartphones, the group has such a small market share that analysts have so far only listed the devices in statistics under “others”. Gartner analysts estimate global sales at less than ten million units a year.

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A look at Google's own figures makes it clear that the hardware business for the company is still small, but is becoming more relevant. In the second quarter, the IT group has made at $ 39 billion in revenue ten billion dollars. Google's biggest business is still advertising.

But at least 16 percent of sales come now through the sale of smartphones, speakers and cloud computing services. This “Other revenue” business increased 40 percent year-over-year to $ 6.2 billion in the second quarter. How much of this comes from the smartphones, the company does not announce.

In the end, the revenue from the device sales for Google but could only be a pleasant side effect. The hardware issue is existential for other reasons: The main business could depend in the future on the dissemination of their own devices and the operating system.

“All the big tech companies like Google, Apple and Amazon It's about getting the most access points, “explains Zimmermann. Recently, Amazon has launched a whole host of new devices on the market. “Google wants to be everywhere and reach people in their daily lives 24 hours,” says the Gartner analyst. Only other tech companies want that too.

In addition to the camera technology Google is strongly on the trend to “ambient computing”. Behind the term is the desire to no longer accommodate all technology in one device, but to put the people in the center and distribute the technology decentralized.

With its new headphones, which will be launched in 2020, Google shows how far that can go. The group promises that users can lock their phones in the locker room of the gym and listen to music on the treadmill. The range without intermediate walls to bridge a football field.

The completely networked house

At home too, Google is seeking a new, completely networked world: thanks to the elegant smart speakers and sensors, the lights and heaters go out of their own accord, the video changes from one room to the next by voice. The “mini nest” devices in the bookcase serve as a telephone and tell who is at the door, whether the dog is barking or the child is in the kitchen.

Ambient computing means that users no longer need their hands. With the new Google smartphone, incoming calls can be made quieter with a calming gesture, songs can be wiped away – and the wake-up signal too. In addition, the device notices when a hand reaches for it and ever goes into face recognition mode.

Other manufacturers have experimented with the gesture control. But not always can predict what the user wants and applies. “The hurdle is always to change user behavior – sometimes it works, sometimes not,” says Zimmermann. “Google can be trusted to deliver really useful features that are easy to use.” The trick with ambient computing and gesture control is that everything works well in the end.

It remains questionable why Google, especially with its smartphones, only relies on the US. CCS Insight's Geoff Blaber points out that Google does not have enough mobile operators to run the pixels in Europe. “So far, Google has not paid much attention to Europe,” says Gartner analyst Zimmermann. Almost even more surprising: “It looks as if the new smartphone is not even offered in the huge growth market of India.” The whole group succeeds so not yet to be there everywhere.

More: Latest mobile phones are also entering the sector of high-priced system cameras. Manufacturers like Nikon and Sony therefore rely on even more sophisticated models.

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