Software giants turn to hardware
Strategy gives more control of products
GOOGLE and Microsoft are shifting long-standing strategies as they chase the success of Apple’s best-selling iPad. Both companies have made their names by providing the software that powers devices made by others, but are now following Apple’s lead and releasing their own hardware.
Google jumped into the fray on Wednesday with its Nexus 7 tablet. Made by Asus, the tablet bears the Google brand name and is made specifically to showcase Google’s content.
This approach has worked fairly well for Google’s Nexus smartphones, which are aimed at Google’s most dedicated users.
The new 7-inch tablet will also compete with Amazon’s Kindle Fire tablet.
Microsoft announced last week that it was releasing its own Surface tablet, a 10.6-inch device designed to compete with iPad and other high-end laptop replacement tablets — a rare hardware push from a company whose focus on software is in its very name.
Control
The moves give the companies more control over their products, providing a straightforward way to get their software and entertainment offerings into the hands of consumers.
“Apple showed everyone that the best end-to-end product is one that you design yourself,” Motley Fool technology analyst Joe Magyer said.
Magyer, who owns stock in Google and Amazon, said that it’s pretty clear that other companies are “copycatting Apple into hardware”.
Google, which finalised its acquisition of hardware partner Motorola Mobility last month, has also taken a small step toward manufacturing its own devices.
In addition to the Nexus 7, Google announced a media streaming device called the Nexus Q – its first in-house hardware product.
Google and Microsoft declined to comment further on their device strategies.
The companies’ hardware partners should be watching the product announcements with a wary eye, analysts said.
“I’m worried if I’m Nokia or other critical Microsoft partners on mobile, because it shows Microsoft is willing to go it alone,” Magyer said, adding that the same is true for top Google Android partners such as Samsung.
Still, it’s unlikely that Google or Microsoft will scale back their relationships with other manufacturers as they try to get their devices in the hands of as many consumers as possible.
“Google and Microsoft will hope that manufacturers will say: ‘Yes, we want to support Play and Win- dows’,” Forrester analyst James McQuivey said.
“But if they decide that they don’t want to support them, then Microsoft and Google have a way to move the market forward.”
Technology watchers should expect more hardware products from Google, said BGC analyst Colin Gillis.
“This is Google’s first toe in the water for tablets under their own flagship moniker, and there’s going to be more to come,” he said.
Focus
Analysts say it’s clear that while hardware is a key piece of Google’s strategy, its endgame is to hook users into buying its apps, video, music and e-books, looking to emulate Apple’s success with its App Store and iTunes store.
That was clear from Google’s focus during its product announcement on how seamlessly the Nexus 7 will connect to things Android users have already bought through the system.
Android engineer Chris Yerga said that the device has been optimised for the Play Store, and Google users will be able to access their Android content on the tablet, right out of the box.
“The real competition is not about the devices in the long run, but about Google Play versus iTunes,” McQuivey said.
By pricing the device so low, Google can target the market that is shut out by Apple’s higher prices – as Amazon’s Kindle Fire has – and make its money on the revenue it pulls in from its entertainment content, analysts said.
In the long run, that model could see Google competing not only with its fellow technology companies, but with media companies, too.
For now, Google doesn’t have the breadth of content to compete with traditional cable companies, McQuivey said. But it is a sign that cable companies will face more competition going forward.
“This is yet another major company to take away people’s attention from cable,” he said. – Washington Post-Bloomberg
One of the main ways Apple will attempt to improve discovery is by making it easier for people to share songs, a popular feature of Spotify’s music-subscription service.
Apple has been negotiating with major record labels for rights that would let a user listen to a song sent to them by a friend for free.
Apple has also announced tighter integration of social networks Facebook and Twitter in iTunes, allowing people to share what they are listening to.
Apple co-founder Steve Jobs, who died in October, often spoke about making Apple the “digital hub” in people’s lives. iTunes has been the critical product to fill that role, starting with music sales and expanding to movies and TV shows.
Customers also use the software to activate and update iPhones, iPads and iPods, as well as to synchronise their libraries of music, videos, photos and applications.
Yet as more content is being stored on people’s mobile devices, organising all that material has become increasingly difficult.
The further integration of the iCloud internet-based storage service is aimed at fixing some of those problems.
Apple is creating separate applications for features that had been included within iTunes. Podcasts are now a separate app on iPhones, iPads and iPod Touch devices, instead of being part of the iTunes app.
To add more multimedia features to iTunes, Apple has been asking music labels for more band photos and videos that can be included.
iTunes is also part of Apple’s plans to expand in Asia. The company announced this week that it would be opening the digital store in Hong Kong, Singapore, Taiwan and nine other markets in Asia.
Music labels have also been urging Apple to offer a music-subscription service similar to Spotify’s, so customers can pay a monthly fee for unlimited access to songs. – Washington Post-Bloomberg