Alphabet’s Google unit generates 86% of its revenue from advertisements on web searches, YouTube videos and other spots all over the digital world
Google need hardware- So many internet and software companies make gadgets now. Amazon, Microsoft, Google and Facebook all make some type of internet-connected computing gear. Even Uber has started to engineer its own electric scooters.
The one thing all these newcomers have in common is that their hardware businesses are irrelevant. That’s important to remember with Google’s introduction on Tuesday of the latest in its growing line of gadgets, including a new model of its Pixel smartphone, a tablet-like computer and a voice-activated video screen for the home.
A central fact gets lost in the hardware hype at Google, Amazon and other tech giants: These hardware neophytes are definitely not setting sales records. And the strategic value of wading into well-established or novel hardware areas is uneven at best.
In 2017 and the first half of this year, Google shipped about 5 million Pixel smartphones worldwide, according to the research firm IDC. Apple Inc. sells as many iPhones in about eight days as Google did in 18 months — and even Apple has a relatively small minority market share in smartphones.
Small numbers aren’t confined to Google, either. Journalists like me can’t stop talking about the “runaway success” of the Echo devices, Amazon.com Inc.’s rapidly expanding lineup of voice-activated home doodads. Amazon sold about 3.6 million of the two most popular Echo models from April to June, Strategy Analytics estimated. Fitbit, a company that journalists like me stopped talking about long ago, sold 2.7 million motion-tracking gadgets in the same period.
Yes, Amazon’s hardware sales are growing and Fitbit numbers are shrinking, but you get the point. For most software or internet tech empires, hardware is a niche hobby, and it will remain so for the foreseeable future.
That leaves the question of why tech companies that built fortunes on areas other than computing hardware are bothering at all. I wasn’t sure about Microsoft’s Surface line for a long time, but I have been convinced that the company successfully spurred new ideas in what a computer could and should be, even as Microsoft sells relatively few personal computers on its own. I’m not completely sold on the strategic merits of Amazon’s Echo gadgets, but it’s clear that the company wants a pole position if computers controlled by voice become the prevalent form of human interaction with machines.