Opinion: The search giant getting into the hardware business seems dangerous, and Google would be wise to enter the hardware fray through acquisitions, not ownership.If I were a competitor and had just heard that Google was "getting into the hardware business," I'd be ecstatic.
What better way for an advertising-supported media company, like Google, to wash through a few billion dollars and see the attention of executives diverted away from the company's main play—whatever that turns out to be.
I'd imagine this is the same way Lenovo must have felt when its executives heard that HP and Compaq were merging, or perhaps eMachines and Gateway.
Not that those mergers closely parallel Google, it's that they illustrate how tough the PC hardware business has become.
Click here to read more about Google's potential move into consumer hardware.
Can you imagine another multibillion dollar company announcing they are getting into the PC hardware business and not seeing its stock price fall through the floor?
Yet, somehow, if that's what Google announces at the Consumer Electronics Show, its stock will rise to a new high, regardless.
General consumer electronics is, if anything, more competitive than the PC hardware business and is an industry where tremendous technical smarts—which Google certainly has—don't always translate into a winner at Best Buy.
That isn't to say there might not be a place for the Google name on hardware, or that the company shouldn't be selling its search appliances to corporate customers. In the case of the appliances, they are just a way for Google to deliver search technology to enterprise customers.
Next Page: Acquisitions make the most sense.
As for consumer products, Google might follow an acquisition strategy and get into the peripherals business.
If Google really wants to compete head-to-head with Microsoft, it should buy Logitech, the PC add-on company that's been doing battle with Redmond, and winning, for many years.
While Microsoft sometimes uses its hardware business to help establish a new market, as it did with wireless home networking products, the company is very competitive in keyboards and mice, earning a nice profit.
Google-AOL deal raises stakes. Click here to read more.
Logitech, however, has done a remarkable job of competing with Microsoft and has a broader product line that includes cameras, speakers and universal remote controls, among other things.
Google might also purchase one of the wireless networking companies and work toward connecting the digital home's entertainment and information devices. I don't have a particular candidate in mind, but there are several possibilities.
Still, I think Google is probably better off avoiding the risk and distraction of actually owning a hardware business. This doesn't, however, prevent Google from licensing its name to hardware manufacturers and taking a piece of the profits.
If some PC manufacturer wants to buy the Google name and see if it sells at Wal-Mart, why not? While they are at it, Google might also license its name for clothing, bed linens and other home accessories.
If Martha Stewart can do it, why not Eric Schmidt?
If Google really wants to follow such a strategy, I'd recommend a consultation with Sir Richard Branson, who turned Virgin Records into a global mega-brand. Or maybe they already have? Suppose the big jet that Google's founders recently purchased is the really the foundation for a Google Airlines?
Think how it might work: Passengers would get on the airport, enter their desired destination, but never know where they will end up. It could be the Google experience, translated to travel.
Seriously, as a media company, Google's best asset is becoming its brand. So why not use it in different places? Google already seems to be headed toward becoming some sort of an Internet provider, through its purchase of unused or "dark" fiber optic networks. Why not consumer electronics?
I remain concerned that Google still doesn't seem to know what it intends to be when it grows up. My guess is the company doesn't know, either, but has the money to flail around until it finds something that works. That isn't a bad strategy, but it could be a very expensive one.
As for PC hardware, Google should stay away from an ownership position, but that doesn't mean the company might not have some role to play in consumer electronics. What that might be and whether it turns into real profits, remains to be seen.
It's not impossible, but it requires Google to become a different company than what it seems to be today.
Contributing editor David Coursey has spent two decades writing about hardware, software and communications for business customers. He can be reached at david_coursey@ziffdavis.com.
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