Market Overview

Google's Hardware Strategy, Explained

Google's Hardware Strategy, Explained
Related GOOG
A Benzinga HQ Exclusive: Ask Gene Munster Anything!
A Preview Of Next Week's Blue-Chip Earnings
8 Investment Ideas From Longleaf Partners (GuruFocus)
Related GOOGL
A Benzinga HQ Exclusive: Ask Gene Munster Anything!
A Preview Of Next Week's Blue-Chip Earnings
Beached-Whale Breakouts Plague Apple, Facebook, Google Despite S&P 500 At Highs (Investor's Business Daily)

Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Google unit introduced this week multiple new hardware products that has some investors wondering how this fits in with the company's strategy.

Google's hardware strategy is to combine artificial intelligence capabilities in its software and hardware with machine learning expertise to better drive adoption, Bank of America's Justin Post commented in a report. On top of that, the new products, especially the Pixel 2 and 2 XL smartphones, are also on par with Apple Inc. (NASDAQ: AAPL)'s iPhone and Samsung's Galaxy S8 and S8 Plus in terms of quality.

But Google is also hoping it can win over iPhone and Samsung loyalists through key points of differentiation, such as camera and video/image capture and processing, the analyst said. Other features include unlimited cloud storage and Assistant integration.

Google made it very clear that it's now "serious" about competing in the hardware business, Post emphasized. While Google and its parent company Alphabet will see some incremental revenue from sales of its new devices, the bottom line impact will be "muted" given the low margin nature of the business.

On the other hand, increased user engagement with the Google ecosystem does bode well for the company's cross-platform data unification and drive incremental revenue through ad sales and search traffic.

Google's new hardware products could suggest there is "some strain" on existing partnerships with Android makers like Samsung given its "more aggressive" hardware plans.

Related Links:

This Chart Shows How Facebook And Google Are Dominating The App Market

Sacconaghi: Google Is Paying Apple $3 Billion A Year To Remain iPhone's Search Engine

Latest Ratings for GOOG

Jul 2017Deutsche BankMaintainsBuy
Jul 2017Bank of AmericaMaintainsBuy
Jul 2017Deutsche BankMaintainsBuy

View More Analyst Ratings for GOOG
View the Latest Analyst Ratings

Posted-In: Bank of America Google Google Hardware iPhone Justin PostAnalyst Color Analyst Ratings Tech Best of Benzinga


Related Articles (AAPL + GOOG)

View Comments and Join the Discussion!

Partner Center