Google finally has a proper hardware unit. Now what? – Re/code

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Lately, Google executives have fixated on uniformity — getting consumers to have a consistent experience across every product bearing Google’s name.

That isn’t easy. With Google’s hardware, it’s been nearly impossible. That’s because those myriad products, like many things at the company, had operated as fiefdoms — initiatives from teams often working in isolation and delivering inconsistent experiences.

As Re/code reported on Thursday, Google is starting a singular hardware unit under former Motorola chief Rick Osterloh to curb this.

The move was welcomed by industry observers, as Osterloh is widely seen as a likable exec with management competency. We know what products he will manage at Google, including the company’s Nexus phones, Chromecast media-streaming devices, and Chromebook computers. But we don’t yet know what — if any — changes in strategy Google is looking to make.

Where Google hardware is going

For example, just how entrenched does Google want to get in the mobile phone business?

Probably not very! First off, it already tried that once with Motorola. Second, unless you’re Apple, it’s historically not a great business to be in — profits are thin, if they exist at all. Just look at many of Google’s Android partners who are getting crushed by stalled growth in smartphones and hyper-competition.

Still, Google likely has some bigger ambitions for Nexus, its device line that has historically been used as a high-end tentpole for manufacturers. Will the new division change that? What parts of the phone experience will Google try to control? Will it try to steal more of the premium handset market from Apple? (Or Samsung?) We don’t know yet.

Nor do we know Google’s full strategy around virtual reality. One piece of hardware that’s not under Osterloh is Cardboard, the thrifty VR headset that works in conjunction with an Android or Apple smartphone. Google has been working to tweak Android and its Nexus devices to accommodate greater VR capabilities. Plus, there is also the likelihood Google is doing a dedicated VR headset. But would that come from Osterloh’s new team, or the one behind Cardboard?

(And what about competing with Amazon’s popular Echo speaker, which is putting a voice-powered search engine in millions of homes? That should be Google’s strength.)

There are some Google hardware devices with significant volume already in place. The company has shipped over 20 million Chromecast devices in two years, making it the market leader in media-streaming dongles, at least by volume. And Google’s Chromebook laptop beat Apple for the top sales slot in schools, its biggest market, last year.

Osterloh’s hiring could indicate that Google is getting more serious about building viable businesses for these hardware efforts. But even there, we’d wager that’s not the primary goal. Instead, those are both means to an end, vehicles for Google’s real businesses: Enterprise software products for Chromebooks; and its streaming and over-the-top media services for Chromecast.

How Google gets there

But even where revenue from hardware is secondary, execution is still critical. Google needs the right distribution channels, supply chain and relationships — all areas where Osterloh’s expertise in shipping hardware could prove useful.

Take Chromecast, which is the most successful in a string of living room devices. Google has finally seen some decent shipments for a product that connects to a TV. But it has also bumped into competitors, including Amazon, which has removed Chromecast from its online store, cutting off a key retail channel.

In addition to these external fights, Osterloh may face hurdles inside too.

He has a powerful slot at Google now. But when I reached out to a few former Googlers who worked on hardware about the hire, they gave a similar response to those I heard after the last big SVP hire, enterprise exec Diane Greene. That is: Can Osterloh navigate Google’s internal politics?

Throughout the years, several top people execs attempted to string together Google’s hardware endeavors. A few tried from Android and Chromebooks; even co-founder Sergey Brin gave it a go around Google Glass. (Not to mention Nest, the other hardware business owned by Google parent Alphabet, run by former Apple executive Tony Fadell.)

None really succeeded.

Contributed reporting by Ina Fried.

Google finally has a proper hardware unit. Now what? – Re/code