As Google sheds hardware ambitions, its software strategy gets clearer

Mike Dano

The sprawling, sometimes chaotic and mostly software-focused nature of Google's I/O keynote yesterday was a clear refection of the search giant's current and future strategy.

The keynote covered areas ranging from automobiles to TVs to biometric sensors, reflecting Google's (NASDAQ: GOOG) breathtaking reach and the company's unfettered ambitions to touch seemingly every corner of the tech world. And the event--complete with a handful of protesters and malfunctioning demonstrations--also reflected Google's "open" approach (and often work-in-progress attitude) toward the mobile market. That approach is clearly evident in Google's app store, in which anyone can publish an app. In comparison, Apple (NASDAQ: AAPL) retains strict control over the apps it publishes (and Apple keynotes are also far more polished).

But perhaps most importantly, Google's I/O keynote showed that the company plans to build only the software layer for the next generation of consumer and enterprise services, not the hardware. And that's what sets the company apart from its closest rivals, Apple and Microsoft (NASDAQ: MSFT). It's also a significant departure for Google, which in the past has used media events to trumpet its latest Nexus device or the latest advancements from its Motorola subsidiary.

Google "was careful to distance itself from Apple's historic approach, describing Android as 'building a platform at scale, rather than a vertical product,'" wrote an analyst from CCS Insight in a report from Google I/O. "We believe this move is more significant than any single feature or product announcement revealed at Google I/O."

At I/O Google sought to offer a unified view of the increasingly disparate nature of personal computing. With its new Android L platform, the company said it will provide a relatively uniform interface into devices ranging from TVs to laptops to automobiles to smart watches--with the smartphone acting as the central, controlling gadget.

And Google's withdrawal from the hardware space appears to have improved its relations with its most important Android licensee: Samsung. As the Wall Street Journal pointed out, Samsung agreed to use Google's Android Wear platform for its new Gear Live smart watch. And Samsung agreed to submit some of its Knox mobile enterprise technology into the Android development repository. Those moves are notable, considering Samsung in the past appeared to be moving away from Android with its Tizen-powered Galaxy Gear smart watch and Z smartphone. (However, Samsung told Cnet it plans to continue to add its own software enhancements to its Android Wear-powered Gear Live smart watch, indicating the company won't walk in complete lockstep with Google.)

But Google's withdrawal from the hardware space is most clear in its agreement to sell its Motorola subsidiary to Lenovo for $2.91 billion. Google is also reportedly planning to discontinue its Nexus program, which essentially allows Google to sell high-end Android devices carrying only the Google brand through its own online sales channels. Google is rumored to be replacing the Nexus program with a different handset development program called Silver, though the company made no mention of that effort during its I/O event.

While Google's I/O event felt slightly empty without the announcement of a new, high-end Android phone, it highlights the difference between Google and its competitors like Apple, Microsoft and Amazon (NASDAQ: AMZN), which have more fully embraced the hardware side of personal computing. Microsoft, for example, paid around $7 billion to acquire Windows Phone maker Nokia. And Amazon recently announced its new Fire smartphone.

Google's focus on software could allow it to more effectively sell its services, including Google Now, Maps and Gmail. And as personal computing increasingly moves from the inside of a device to the inside of a cloud, that strategy may well win the day. --Mike |+MikeDano | @mikeddano

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