Google launches new phones, speakers in hardware push

Published October 04, 2017
Reuters

Alphabet Inc's Google on Wednesday unveiled the second generation of its Pixel smartphone along with new voice-enabled home speakers, redoubling its commitment to the hardware business as it competes with a surge of devices from Apple Inc and Amazon.com Inc.

The new devices, which include a Pixelbook laptop, wireless earbuds and a small GoPro-like camera, showcase Google-developed operating systems and services, notably the voice assistant. That means usage of those devices should stoke the company's core ad sales business as buyers of the hardware use Google services like search and maps.

The Pixel 2 smartphone comes in two sizes, with comparable features, including aluminum bodies and no traditional jacks for headphones. Prices for the base model start at $649, while the high-end version starts at $849. The phones will be available Oct. 19.

Pixelbook, priced at $999, is the first laptop powered by Google Assistant and will support Snap Inc's Snapchat, the company said. It will be available in stores from Oct. 31.

Google Home Mini, the new speaker, is priced at $49 in the United States and would rival Amazon.com Inc's popular Echo Dot. It will be available by the end of the year.

The Pixel debuted a year ago, with analysts estimating sales of more than 2 million, pushing Google to record amounts of non-advertising revenue. Google's "other" revenue category, which includes both hardware and sales of online storage services, accounted for about 12 percent of overall sales in its most recent quarter.

Last month, Google expanded its hardware development capabilities by picking up a 2,000-person smartphone engineering team at HTC for $1.1 billion.

"It’s pretty clear Google is serious about hardware," said Avi Greengart, research director at consumer data firm GlobalData. "Given that there is a Pixel 2, and given the financial investment, there must be a longer-term strategic intent."

HARDWARE CHIEF HAS SECOND GO

Five years ago, Google moved into smartphones with the $12.5-billion purchase of Motorola Mobility. But Motorola's hardware team under Rick Osterloh and Google's Android mobile operating system division remained independent.

Google avoided giving a special advantage to Motorola to protect its relationships with Samsung, LG and other distributors of Android. The company later sold the Motorola smartphone business but kept its patents.

This time around, Osterloh moved to bring in-house the HTC team that Google had been contracting to design the Pixel.

He also enjoys a strong relationship with Hiroshi Lockheimer, the Android division head. The pair have been friends since working together for several years at Good Technology in the early 2000s.

Protecting relationships with others in the Android ecosystem is now less of a concern. Samsung ratched down the rivalary with Google after the firms agreed to a major patent licensing deal in early 2014. Other vendors have seen their market share dip.

Google's eye is on Apple, whose iPhone has become the iconic smartphone.

The first Pixel debuted a year ago with a significant marketing push: during the last three months of the year, Google spent an estimated $110 million to air 12 Pixel-related commercials, according to data from advertising measurement firm iSpot.tv.

Apple spent $147 million during the same span, iSpot.tv said. But Apple has sustained its TV time throughout the last year, while Google's efforts have tapered off.

The expanded speaker selection now includes the $399, dual-woofer Home Max and as well as the $49 Home Mini.

The new Pixelbook features a 12.3-inch LCD touchscreen, a 10-hour battery and a hinge to fold the gadget into a tablet. It comes with Google's ChromeOS operating system.

Google also announced a partnership with Walt Disney Co to bring Mickey Mouse and "Star Wars" content to its Google Home speakers as part of an effort to drive children under the age of 13 to play with the devices.

(Reporting by Laharee Chatterjee in Bengaluru; Editing by Jonathan Weber and Andrew Hay)