Google Passes on PCs
Google (Nasdaq: GOOG) and Wal-Mart are both denying reports that the two are planning to market low-priced, Google PCs via Wal-Mart stores.
The LA Times reported Monday that Google intends to market a fully functioning PC running a Google operating system and pricing out at a bargain basement $200.
The account suggests Google co-founder Larry Page will unveil the "Google PC" during his keynote address at the Consumer Electronics Show in Las Vegas this Friday. (See Google Is Taking Over the World.)
Several Wall Street analysts to whom Light Reading spoke Monday had heard chatter of a simple Google home device, but not of a full-blown personal computer product.
Analsyts believe it is more likely that Google will announce a partnership with a well-known hardware manufacturer if it decides to build such a device.
That view seems to tally with Google's response to the rumor Monday. "We have many PC partners who serve their markets exceedingly well and we see no need to enter that market," Google spokeswoman Eileen Rodriguez told Light Reading via email. "We would rather partner with great companies."
The LA Times report further asserts that Google has been in talks with Wal-Mart stores to market the new PC product, a notion Wal-Mart firmly denies. “There is absolutely no truth to that rumor,” Wal-Mart spokeswoman Jolanda Stewart told Light Reading Monday.
But as with many rumors, there may be some truth in Google's home hardware aspirations. Analysts have long wondered if Google might enter the hardware game as a way of delivering new, network-based Google applications. (See Google VOIP Apps Stare Down Startups.)
Bear Stearns & Co. Inc. analysts speculated in a December 19 research note that Google would market a Google “cube,” a small device which would deliver music, video and even VOIP calls from the PC to the televisions, stereos and phones in the home. (See Google Cubes and AOL/Google: VOIP Buddies .)
“The cubes would be designed to be as "dumb" as possible (which is the whole point of making the network the computer), and Google would probably subsidize them so that they cost less than $20 or maybe even free (like AOL CDs),” explains Bear Stearns analyst Robert Peck in the note.
But the LA Times goes much further, asserting that Google will market a smart device with Google brains.
Some Google watchers question the strategy and timing of Google entering the PC arena. "The profit margins have got to be razor thin,” says Bill St. Arnaud, Internet analyst and senior director of advanced networks at Canarie Inc. .
“It will also put Google in direct competition not only with Microsoft Corp. (Nasdaq: MSFT) but Apple Inc. (Nasdaq: AAPL), and perhaps Intel Corp. (Nasdaq: INTC), as well,” St. Arnaud says.
St. Arnaud points out that Google’s immediate challenge is moving from its core search business into applications, an area in which rival Microsoft currently dominates.
“In time, with Web services, more applications will move to the network from the desktop,” St. Arnaud says. “But I think Google has got to first get these applications developed and solve the bottleneck in the last mile rather than competing with Microsoft on the OS.”
What is likely is that Google -- as it has done with its search appliances for enterprises -- is seeking some way of using hardware to connect more people to its services -- so it can deliver more ads and book more revenue.
Google founder, Larry Page, is scheduled to speak 4 p.m. Friday, January 6 at the Las Vegas Hilton during the Consumer Electronics Show. The company hasn't commented on what he plans to discuss at that appearance.
— Mark Sullivan, Reporter, Light Reading