Light Reading

Google Passes on PCs

Light Reading
News Analysis
Light Reading
1/3/2006
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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

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photon2
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photon2,
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12/5/2012 | 4:10:26 AM
re: Google Passes on PCs
LR: this was in a NY Times (I think Sunday) article weeks ago.....nice to see you're on top of things!
opticalwatcher
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opticalwatcher,
User Rank: Light Beer
12/5/2012 | 4:10:25 AM
re: Google Passes on PCs
The NY Times article--see page 4 of:
http://www.nytimes.com/2005/12...
mentioned a possible Google thin client PC in partnership with Wyse, but nothing about a Google denial, which is LR's article.

I'm fastinated by this because every effort to do this in the past (including Sun, and Oracle) has been pretty much ignored by the public.

Considering you can get a $200 PC from Wal-Mart right now,
http://www.pcworld.com/news/ar...
why would Google mess with selling hardware when what they are really offering is a service that runs on any hardware?
yhza
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yhza,
User Rank: Light Beer
12/5/2012 | 4:10:25 AM
re: Google Passes on PCs
Build their own Internet, their own PSTN, and now their own PC with its own OS!!

1- Google management is clearly confused. They obviously have a lot of cash (and stocks) and need to enhance the solid but undiversified business model. However, these crazy plans make no sense to me.

2- Analysts will do anything to keep the current stock run up. If Google starts selling pastries in downtown Katmandu, analysts will up GOOG price target to 1000$+ citing huge potential from doughnuts loving Nepalese.
Mark Sebastyn
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Mark Sebastyn,
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12/5/2012 | 4:10:25 AM
re: Google Passes on PCs
Note - the Bear Stearns report freely admits it got this idea from Robert Cringley. While a neat idea, I think readers are a little misled by what is likely just speculation. Oh, the hazards of being a pundit.

Quoted from Cringley:
"But the most important reason for Google to distribute its data centers in this way is to work most efficiently with a hardware device the company is thinking of providing to customers. This embedded device, for which I am afraid I have no name, is a small box covered with many types of ports - USB, RJ-45, RJ-11, analog and digital video, S-video, analog and optical sound, etc. Additional I/O that can't be seen is WiFi and Bluetooth. This little box is Google's interface to every computer, TV, and stereo system in your home, as well as linking to home automation and climate control. The cubes are networked together wirelessly in a mesh network, so only one need be attached to your broadband modem or router. Like VoIP adapters (it does that too, through the RJ-11 connector) the little cubes will come in the mail and when plugged in will just plain work."

Original article by Cringley is here.
http://www.pbs.org/cringely/pu...
mrbhagav
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mrbhagav,
User Rank: Light Beer
12/5/2012 | 4:10:22 AM
re: Google Passes on PCs

I tend to agree. Google is incredibly smart at leveraging the advertising revenue model; the whole wi-fi nonsense in San Francisco is targeted at that as well. But how could they continue to leverage advertising and sponsorship dollars if they get into home media hardware or PCs, an area that the hitherto software company has absolutely no experience with? Do they plan to insert sponsorhips into streamS of content exchanged between the so called "cubes"?!!

Mark Sullivan
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Mark Sullivan,
User Rank: Light Beer
12/5/2012 | 4:10:19 AM
re: Google Passes on PCs
My friend Bart reminds me that all Google rumors are true, because 20 percent of their employees' time is spent developing crazy (or gamechanging) technology. They probably DO have people working on a Google PC. Whether it makes sense to bring it to market is another question. But the Google PC or the Google cube, dumb or smart, does give Google a chance to exert some control over the last mile, which may help it push more revenue-generating apps/services to consumers. Right?
Mark Sullivan
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Mark Sullivan,
User Rank: Light Beer
12/5/2012 | 4:10:18 AM
re: Google Passes on PCs
Thanks for pointing that out -- we'll try to stay caught up with our Sunday reading a little better. Hope you were able to find something useful in our account, too.
rjmcmahon
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rjmcmahon,
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12/5/2012 | 4:10:18 AM
re: Google Passes on PCs
Seems better for GOOG to acquire FireFox. Any chance of that happening?
mrbhagav
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mrbhagav,
User Rank: Light Beer
12/5/2012 | 4:10:17 AM
re: Google Passes on PCs
"But the Google PC or the Google cube, dumb or smart, does give Google a chance to exert some control over the last mile, which may help it push more revenue-generating apps/services to consumers. Right?"

I think this strategy makes sense if Google is trying to push proprietary apps/services to consumers; I may not be saying this correctly, but I mean apps/services that need to be wedded to hardware (a la microsoft of the past). On the other hand, it may be more effective to simply push these apps/services over consumer gateways and in-home media centers provided by a multiplicity of vendors. Google could in fact contribute to new product development of its vendor partner(s), guide the creative process and assist in the marketing of such media systems, without actually getting into the hardware business itself. Its kind of like the Yahoo-SBC model, but much more creative and targeted.


rjmcmahon
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rjmcmahon,
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12/5/2012 | 4:10:15 AM
re: Google Passes on PCs
Google could in fact contribute to new product development of its vendor partner(s), guide the creative process and assist in the marketing of such media systems, without actually getting into the hardware business itself. Its kind of like the Yahoo-SBC model, but much more creative and targeted.

I think another analogy is how Linksys and Netgear work with Asian mfgs and third party sw vendors to build and sell low cost home gateways. The challenge seems to be finding actual value that could be added into the gateway. Google's value proposition is really in the backend server infrastructure and Google adding value via a CPE (pc or other) is nonobvious.
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