Google’s Hardware Failure is Inevitable (Premium)

According to a new report, Google is scaling back its hardware ambitions and will downsize the group that makes its laptops and tablets. If true, this is a stunning failure for a company that has been desperate to mimic Apple’s success. But this was also inevitable. Google is no Apple, and its business model precludes this type of success.

And yes, Microsoft provides an interesting proof-point for the limits of competing with your own partners.

According to a report in Business Insider that cites multiple sources, Google has told dozens of employees on its Create team—which makes the firm’s Pixel laptops and tablets—that they will need to find new jobs elsewhere within the company. The sources attribute “roadmap cutbacks” to the downsizing, noting that multiple Create projects for future hardware products have been canceled.

Yes, it’s possible that Google could reignite Create product development. The employees who were working on the canceled projects were told to find temporary, rather than permanent, roles within the company. But I think everyone sees the writing on the wall. Google’s hardware efforts to date can only be described as a failure.

And that failure extends across all of its hardware—from smartphones to smart speakers to tablets and laptops and so—and to every possible metric. None of Google’s hardware sells well, and its reliability issues are both well-documented and legendary, especially in smartphones.

Google moved tepidly to embrace Apple’s model, citing the same rationale as Microsoft did when it purchased Nokia’s smartphone business and created the Surface PC line: Those who are serious about software must inevitably make their own hardware as well. As I noted before, however, both companies took this infamous Alan Kay quote from yesteryear and misapplied it in their own product plans: Google and Microsoft, unlike Apple, rely on partners to distribute their software platforms. And it is not possible to effectively compete with those companies while also partnering with them.

The correct application of the Alan Kay quote for partner-centric firms like Google and Microsoft is to create hardware components—like Google’s Visual Core and Microsoft’s PixelSense Accelerator—that benefit the entire ecosystem of partners. Instead, these firms have tried to differentiate their own hardware offerings with these unique components, effectively leaving their partners at a disadvantage.

And both companies have suffered as a result of this miscalculation. In Microsoft’s case, the Windows Phone platform on which Nokia’s smartphone business was based cratered, and Microsoft killed it off in 2015. As for Surface, it remains a boutique PC business by the standards of Microsoft’s biggest PC maker partners and is thus considered uncompetitive. (Yes, yes, Surface is a billion-dollar business. It’s also an unprofitable billion-dollar business.) It also helps that Microsoft has ignored modern standards like Thunderbolt 3 while pushing forward with its own proprietary and under-powered Surface Connect technology. Which it naturally doesn’t share with its PC maker partners. (Most of which probably find it quaint.)

Microsoft’s relationships with its partners have always been tortured, and Google has the same problem. After practically begging PC makers to adopt new technologies faster in order to drive Windows sales, it finally broke down and began offering its own Surface-branded PCs. In Google’s case, smartphone makers have taken the open nature of Android to its logical breaking point by masking Google’s user interface/experience efforts with custom skins. And in extreme cases—as with Samsung or, more recently, Huawei—literally replacing as much of Google’s ecosystem of Android apps and services as possible.

In short, both Google and Microsoft have long had uneasy relationships with the companies they partner with, and that uneasiness goes in both directions. Hardware makers don’t like being beholden to an outside software platform maker. And Google and Microsoft don’t like the directions in which their hardware partners have gone. Both have been actively working to undermine the other for years.

For Google, this meant working with hardware partners for years via the Nexus program, so that it could help build handsets that delivered “the best of Google.” These kinds of devices—just like Microsoft’s clean Surface PC software images—are desirable to users. But they also cut into the entire point of the hardware-based ecosystem, in large part by cutting out the added value that hardware makers—and in the case of phones, wireless carriers—add to each device. Those value-adds, whatever you think of them—are literally how these companies make money. So when the platform maker works to cut them out of the equation, well, you can see how animosity might result.

Google, like Microsoft, eventually graduated from working with hardware partners to just competing with them. The first Pixel-branded devices were no different from the Nexus lineup, despite the marketing. But over the past two years, Google has moved to bring more and more of Pixel in-house. It even purchased most of the HTC smartphone team that had previously helped it design that Pixel 2 lineup. (And let’s not forget that Google once owned, then ignored, and then sold, the Motorola smartphone business.)

This led many to believe that Google was “serious” about hardware. That, and its expansion into a bewildering array of devices that now includes VR headsets, smart speakers and smart displays, Chromecast dongle, laptops, and tablets. But Google’s allegedly seriousness about hardware is a perennial thing, something that is marketed anew each year as if this hadn’t been happening for years. The issue isn’t whether Google is serious or not. It’s whether it can succeed in this effort.

And it cannot.

Google, like Microsoft, is a boutique hardware maker that cannot rival the expertise, experience, scale, or market exposure of its biggest hardware partners. It has had issues getting its devices distributed in a manner similar to Samsung or Huawei, and its own web-based store is a quaint affair that in no way resembles those of the market giants. That Google’s smartphones are incredibly unreliable doesn’t help, either, and that’s an issue I’m sure Microsoft can relate to, given its Surfacegate problems. The net result is that Google’s hardware, universally, has not sold well.

And there were plenty of other warning signs. Google never revved the expensive but limited Pixelbook, deciding instead to release a single 2-in-1 product, the Pixel Slate, in 2018. Which was itself a replacement for the Pixel C tablet, which failed miserably. So it now offers a two-year-old laptop and a single goofy tablet. This lineup makes even Surface look modern and fast-moving by comparison.

So what can Google—and Microsoft—do? Simple: It’s not possible to effectively compete and partner with the same companies. So it needs to decide which route to take. But given the nature of Android (and Chrome OS), Google’s fate is sealed, and it should choose to go the partner route while focusing its hardware efforts on those components that can benefit the entire ecosystem. That way, Android handset makers could license, say, Android and the Pixel camera system from Google. This would benefit everyone in the chain, from Google, which would see higher revenues, its partners, which could produce better products, and the customers, who would have more high-quality choices. It’s kind of a no-brainer and is, incidentally, the only way these firms can effectively challenge a monolithic industry power like Apple.

Which, as I understand it, was the point of all this hardware to begin with