USAToday Column

October 7, 2017
Why does Google think you'll buy a $1,000 Chromebook?

By Bob O'Donnell

SAN FRANCISCO, Calif. — One of the more puzzling questions after the recent Google hardware event was an obvious one. Why would anyone bother spending $1,000 or more for a Chromebook?

After all, most vendors sell Chromebooks as sub-$300 alternatives to traditional laptop PCs. So, what was Google thinking introducing a product that, in some configurations, could be four times more expensive than its competitors?

On the hardware side, the $999 Pixelbook Chrome OS-based laptop is significantly more powerful than any other Chromebook. It features a slim, convertible design, it’s powered by an Intel i5 or i7 CPU, and offers options for up to 512 GB of storage on an internal SSD (solid state drive). All in all, a decent machine, but at $999, it’s going to face an extraordinarily difficult time competing against much cheaper and arguably more useful Macbooks or hybrid laptops running Windows 10 such as the Microsoft Surface or Lenovo Yoga, which carry similar price tags. 

To understand the justification for Google’s pricing, you have to make sense of Google's philosophy toward hardware. Specifically, Google is counting on the tight integration of its popular services—everything from search, translation, voice-based assistants, computer vision and more, all driven by artificial intelligence—to justify premium hardware pricing. (This is true not only for the Pixel Book, but for the new Pixel 2 smartphones and all the other devices the company just introduced as well.)

In other words, Google hopes these services will provide the spark to turn a fairly standard-looking set of new tech hardware products into devices the company hopes consumers will find to be magical.

While I understand the approach, I just don’t think many consumers are going to agree.

Edge computing
Google's latest hardware products show it starting to move away from performing these services in the cloud, as Google has traditionally done, and towards doing at least some of this work on the devices themselves. This concept of what’s often called “edge” computing has been bubbling under the surface of the tech industry for the last few years, but Google’s efforts at this event have arguably pushed it into the mainstream.

Edge computing includes the Pixel 2 phone’s ability to automatically recognize music and display the artist and song name on the phone’s screen without a network connection and the Google Home Mini’s ability to distinguish between different people speaking to it via what its calls Voice Match.

Another key takeaway from the event was Google’s focus on combining and integrating multiple services across different devices. At a basic level, for example, the company added Google Assistant to the new Pixelbook, but interestingly, with the addition of the $99 Pixel Pen, you can do things like circle text and images on the screen and have it automatically do Google searches based on that criteria.

Even more impressive was the demo of Google’s Translate service with a combination of a Google Pixel 2 phone and the company’s new Google Pixel Buds wireless earphones. The combination of all these elements allowed two Google employees speaking Swedish and English to have a nearly real-time conversation, with the Google Assistant feature serving as a go-between across all the different elements. While not everyone needs this type of real-time translation, it was a very compelling and clear example of the type of computing future that Google is trying to create.

There are still a number of challenges with Google’s services-driven approach to hardware. For one, most people—particularly for well-established product categories such as laptops and smartphones—are still primarily focused on the hardware itself. In that regard, Google’s vision is likely ahead of the market. Plus, it makes the premium pricing that they put on their products difficult to accept.

As with the new Pixel Book, the Google Pixel 2 and 2Plus are definitely nice phones, but they aren’t likely to dramatically change people’s perceptions about other high-end Android-based offerings, such as Samsung’s S8 and Note 8, nor the iPhone X. I do think this round of Pixel phones will do better than the first iteration—thanks in part to clever innovations like the ability to squeeze the phone to bring up Google Assistant—but that’s not really saying much.

In other newer product categories, such as smart speakers, smart earbuds, and smart cameras, where there aren’t necessarily an agreed-upon set of expectations nor a long history of focus on design, specs and compatibility questions, the company is much more likely to see commercial success. Both the Home Mini and audio-focused Home Max, for example, should be able to hold their own even against Amazon’s latest barrage of Echos. In addition, while not everyone will love their design, both the Google Assistant-enabled Pixel Buds wireless earbuds and the Google Clips camera can benefit nicely from the range of services that Google is now offering.

Long-term, Google is trying to drive an agenda around the future of computing that is very different from what we’ve had until now. While I’m not convinced that everyone is ready for an AI-driven, services forward approach to the tech market just yet, I do believe it's enabling an interesting glimpse of things to come.

Here’s a link to the original article: https://www.usatoday.com/story/tech/columnist/2017/10/07/why-does-google-think-youll-buy-1-000-chromebook/741638001/

USA TODAY columnist Bob O'Donnell is the president and chief analyst of TECHnalysis Research, a market research and consulting firm that provides strategic consulting and market research services to the technology industry and professional financial community. His clients are major technology firms including Microsoft, HP, Dell, and Qualcomm. You can follow him on Twitter @bobodtech.