Why is Google Making Phones, Anyway?

Google-branded phones own about 1% share of the smartphone market, have limited carrier distribution, and won’t make real money for several years. Amazon and Microsoft both tried, and failed, on phones. Even Google’s initial phone foray, with Motorola, was a bomb. As my Techpinions colleague Jan Dawson pointed out in his excellent piece yesterday, Google doesn’t even seem all that serious about selling phones.

So, why is Google making smartphones? In fact, they just doubled down, acquiring HTC for $1.1 billion (a bargain) and introducing two new Pixel models.

The historic argument was that for Google, the more screens on which to view Google ads and do Google searches, the better. But Google is getting plenty of traffic from iPhone as the default search engine on iOS, as well as from Android devices. So selling a few million Pixels won’t really make a material difference to Google’s mobile search business.

My view is that Google’s commitment to being in the phone business is part of a broader strategy, with three central elements. First, there are those who believe that Pixel is an important component of Google’s commitment to hardware, along with Home speakers, Clips camera, Daydream VR headset, Pixelbook laptop, and even the AI-powered Pixel earbuds. But I think Pixel phones are necessary to some things that Google wants to accomplish in the wireless and connectivity arena. No, I don’t think they’re going to buy Sprint or T-Mobile. But I think they do want to play a broader role in connectivity, which includes multiple forms of wireless. Google continues to invest in Project Fi, their hybrid Wi-Fi mobile offering that works best on Google-centric phones such as Nexus and Pixel.

Google is also playing an increasingly pivotal role in the evolution to 5G. The company has a good chance of being selected by the FCC as one of the Spectrum Access System administrators for the shared 3.5 GHz spectrum (CBRS). Google has also been part of an industry push to make spectrum in the 3.7-4.2 GHz band available for 5G. Alongside this effort on the ‘mid-band front”, Google is part of a group of 30 key industry players pushing the FCC to set aside more spectrum for unlicensed (AKA Wi-Fi) users in the 6 GHz band, which sits in proximity to the 5 GHz band used for Wi-Fi. Also on the “5G” front, the Pixel 2 incorporates the latest LTE advances—3 Way Carrier Aggregation, 4×4 MIMO, and 256 QAM—which will allow Google to learn more about what some advances on the road to 5G might mean.

Google is investing in other forms of connectivity as well, from Google Fiber in the U.S. to Project Loon, an effort to bring the Internet to unserved areas. A test this summer kept one of its Loon balloons over Peruvian airspace for fourteen weeks. Google also needs to keep its eye on Facebook, which itself is involved in some of these groups but is also leading the Telecom Infrastructure Project and doing some other super-secret stuff.

Second, I think that being more directly involved in phones is important to Google’s AI push. Mobile devices are going to be a big part of how users experience AI, in ways different than they might from PCs or other types of hardware. And even though Google search is the default on iOS and Android, Google Assistant faces much greater competition from Apple (Siri) and Samsung (Bixby), plus of course Microsoft and Amazon. So Google needs its own hardware, from PCs to home speakers to phones, to work on some of its important AI efforts, such as Assistant. One of the new/unique aspects of the Pixel 2 is the Active Edge, which allows the user to squeeze the side of the phone to launch Assistant.

Third, Pixel represents a relatively cheap way to do some public R&D around several initiatives. If you think about it, Pixel is really a big public beta. They get HTC for $1.1 billion – a relative pittance in Google/Silicon Valley terms, plus they can now use Google powered phones to test things from Project Fi to AR (Google’s ARCore framework is fully active on the Pixel 2), to some nifty tricks on Assistant, in a way that they can’t on other Android-powered devices. And the risk is relatively low, by comparison. Something messes up, and they upset a few million Pixel/Nexus customers, not a few billion iPhone and Galaxy customers.

With a relatively modest investment, at least in Big Internet Player terms, Pixel phones allow Google to be masters of their own Android domain, providing a walled-off mobile testbed for new capabilities related to connectivity, AI, AR, and other concepts.

Published by

Mark Lowenstein

Mark Lowenstein is Managing Director of Mobile Ecosystem, an advisory services firm focused on mobile and digital media. He founded and led the Yankee Group's global wireless practices and was also VP, Market Strategy at Verizon Wireless. You can follow him on Twitter at @marklowenstein and sign up for his free Lens on Wireless newsletter here.

158 thoughts on “Why is Google Making Phones, Anyway?”

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  6. Mir Jafar“ For those who missed the pieces, I visited Edzard Ernst’s blog after Iqbal mentioned it and after I found a copy-paste quote he was reusing from his posts there.”You selectively forget to mention the sources from where copies are made and pasted for you. All sources are from your scientific medical world, with no bias from complementary medicine and definitely not paid for by complementary medicine. Every comment is taken from a source that is un-impeachable because before publishing it, he would have cross checked it numerous times to ensure the AMA cannot destroy his career.“ I was exasperated to find that all the counter arguments that I was presenting Iqbal have already been presented to Iqbal, all over the web for the last 8-9 years at least… and that he was saying the same things, over and over, without learning a single thing. ” You write as if you are pleading a case in front of a jury! No one gives a damn about you or me. Just explain a situation that is completely contradictory and defies the required, expected scientific outcome. And, you state it wrong: I AM NOT saying so: it is research icons from the scientific medical world and doctors saying so. For jogging your memory: this is what you wrote and my reference to Dr Eddy:“……. as long as they are applied when they should be applied.….. not the failures in judicious application of it.”Is there a reference available that will ensure patients do not get hurt? NO! Is there a learning from mistakes? No. And talking about judicious application, there is some serious problem on your hands: This comment is from Dr David Eddy: you know something about this doctor or would you have me inform you?“The plain fact is that many clinical decisions made by physicians appear to be arbitrary, uncertain and variable. (remember your asking for a second opinion for my friend’s son) Reams of research point to the same finding: physicians looking at the same thing will disagree with each other, or even with themselves, from 10 percent to 50 percent of the time during virtually every aspect of the medical-care process—from taking a medical history to doing a physical examination, reading a laboratory test, performing a pathological diagnosis and recommending a treatment. Physician judgment is highly variable.Give a group of cardiologists high-quality coronary angiograms (a type of radiograph or x-ray) of typical patients and they will disagree about the diagnosis for about half of the patients. They will disagree with themselves on two successive readings of the same angiograms up to one-third of the time. Ask a group of experts to estimate the effect of colon-cancer screening on colon-cancer mortality and answers will range from five percent to 95 percent.Ask fifty cardiovascular surgeons to estimate the probabilities of various risks associated with xenografts (animal-tissue transplant) versus mechanical heart valves and you’ll get answers to the same question ranging from zero percent to about 50 percent. (Ask about the 10-year probability of valve failure with xenografts and you’ll get a range of three percent to 95 percent.)”“….a state of ignorance for which doctors cannot really be blamed. “The limitation is the human mind,” Eddy says. Without extensive information on the outcomes of treatments, it’s fiendishly difficult to know the best approach for care. The human brain, Eddy explains, needs help to make sense of patients who have combinations of diseases, and of the complex probabilities involved in each. ““I’ve spent 25 years proving that what we lovingly call clinical judgment is woefully outmatched by the complexities of medicine.” Think about the implications for helping patients make decisions, Eddy adds. “Go to one doctor, and get one answer. Go to another, and get a different one.” Or think about expert testimony. “You don’t have to hire an expert to lie. You can just find one who truly believes the number you want.”That is comment from Dr. David Eddy: you disagree? Dr Eddy is known as father of “evidence based medicine”. What in essence he describes is: there is no way you can have judicious application in medicine and this cannot be rectified with humans as doctors. Dr Eddy went against ALL existing norms of medical processes. This is really known as the DK effect. Why not accuse him of it and check if you can find some dirt on him for an article on rationalwiki.“ I said as much and now for him, I have become a traitor. He thinks he is “running me down” – as amusing it is to watch his gears turn, this is likely the last long post I have on Iqbal.”Mir Jafar was a traitor in the eyes of Indians, not the British because he asked for British help when he could not handle the enemy. He was just weak. You acted just like Mir Jafar.“http://edzardernst.com/” “to anyone who is not in the medical track but wants to understand medical pseudoscience criticism from an academic. ……… language that makes it accessible to general public.” Before you recommend something, you should cross check it first. Not everyone would be as stupid as you. Just look at some of his recent blogs and tell me if my assessment of him being a paid SHILL is incorrect:“ The death of a diabetic child: God had guided the herbalist to use herbs rather than conventional medicine.”He reported the case of one child being killed by a herbalist in LA USA. Great reporting and concern for life. What he studiously avoids to report is the situation in his own back yard: 24,000 diabetes deaths a year ‘could be avoided’ – BBC News Up to 24,000 diabetes-related deaths could be avoided in England each year, if patients and doctors better managed the condition, a report concludes. The first-ever audit of patient deaths from the condition said basic health checks, a good diet and regular medication could prevent most of them.The Department of Health in England said shocking variations in care and an unacceptable death toll were evident. 72000 deaths a year from diabetes of which 24000 because of doctor errors!!!!!!!!!!!!!!! (You know the population of England and do you believe in audit of NHS?)What is your assessment about his reporting one death and missing 24000 deaths with exactly same reason closer home?Another equally interesting issue:“Severe liver injury due to naturopaths’ prescription of Epsom salt” He found one death in India that was a 2nd in 12 years: same cause. Impressive. Does he write about children dying from cancer?Almost 100,000 children die of cancer each year; new drugs urged: Lancet. Each year, nearly 100,000 children under 15 die from cancer worldwide. That is 1.2 million children dead for the same period. That’s almost 250 children a day – a startling statistic given that about 80 percent of childhood cancers are potentially curable with existing treatments.More than 90 percent of these deaths occur in underdeveloped countries. Yet, even in prosperous nations like the United States, improvements in child cancer survival rates are threatened by a lack of new drug development. 257 children dying in UK every year: that is 3084 children dead in UK for the same period.Edzard ever address this issue? No. You know why? This is not for what he is paid to write for. He cannot write about drug companies making exorbitant profits and not venturing into under developed countries to save children. Why do you think he turns a blind eye to so many children’s deaths? If he wrote on this subject he would implicate his payment sources. He was Chair of the Complementary medicine at Exeter for 20 years. What do you believe his job was? To find ways to improve reporting and trial procedures for Complementary medicine? To help remove errors in reporting and find reasons for good and bad medicine? No. From day one, he used his position to run it into the ground. He came in with claims that he was trained in different disciplines (I received hands-on training in acupuncture, autogenic training, herbalism, homeopathy, massage therapy and spinal manipulation) How much time do you believe this should really take: a lifetime? And then he gave an interview:Edzard Ernst Exposed: An ‘Expert’ Without Qualifications.50 of homeopathy is the understanding of Materia Medica. So I asked 2 simple questions that a student of homeopathy is taught in the first year:1. What is the difference for prescribing Aconite and Belladone in fever.2. What is one red line symptom for Lachesis.He refused to respond: that speaks volume about his lying about his hands on training of homeopathy. He is accused of lying and fudging figures by others also:(not homeopaths) karger.com_Article_FullText_355916 So before you become a full fledged Mir Jafar, learn to protect your backside.“The reviews for his books are very good. I did not read any of them though. But I did hear personally that “Trick or Treatment” was very good.” You are a disgrace to scientific community that you try to represent: “i did hear personally,,,,,,,,” If pharma industry can pay: “Authors of premier medical textbook didn’t disclose $11 million in industry payments.” isn’t moving a few hundred books off the shelves and throwing it in the dustbin entirely possible? Or putting them in libraries for students like you to read and get motivated?“in many areas of life, incompetent people cannot recognize — just how incompetent they are, a phenomenon that has come to be known as the Dunning-Kruger effect. Logic itself almost demands this lack of self-insight: For poor performers to recognize their ineptitude would require them to possess the very expertise they lack”You misuse the DK reference here. I have not written one paper in rebutting your fallacy: I have selected references from BMJ, Lancet and Pubmed: you believe this to be equated to Dunning Kruger effect: go back to the reading of the trait. To say your thought process is medically bankrupt would be simpler: thinking like a chemist to portray your self as a doctor: you need to learn to understand the difference?“The effect is present everywhere. ……. A biblical creationist who barely got a high-school diploma may think evolutionary biologists are fools, but that he just gets it.”Invalid statements quoted out of context. I prefer 12 avatars of Lord Vishnu.“For instance, Iqbal thinks that even though he has not studied Biology since he was 15, he thinks he is “running down” Edzard Ernst, a mainstream scientist with two doctorates in medicine and completely mainstream views on science.” I rub Edzard’s nose into the ground not because of his degrees but because of his position as a shill. He makes errors not because he uses his degrees to advantage but because he misuses it to push wrong science and for this all I have to do is use references from doctors who are better educated and better placed into the medical world, than him. Dr Eddy, Dr Hedge, Dr Leape, Russ Altman are some of the many great references. And Edzard can do nothing about it. He has to pay for his misdeeds. His blogs are read only because of dissenting voices. He is no different than you: only smarter. He makes money out of writing trash. Do you?“… like Hegde – you certainly don’t need to be a scientist to laugh when he says you can restructure water with your thoughts and the mood of the person who drinks it.” No idea.“But Edzard is one of the, if not the most scholarly critics on the topic.” If this is your considered opinion, you need to look at redoing science from class 10 again and logical reasoning from class 3.“…school level and was in charge of failure analysis of some machinery in a rubber plant, but thinks that scientists don’t understand time as a dimension, but that he does – hilarious)”You could do proper research. Your research stinks.“…………tions, they did not change their views, they dug in deeper. The kind of reasoning that people like Iqbal demonstrate is called closed-circuit thinking.” You are really weak in reasoning. Forget what I think or don’t. Just focus on and negate what I comment here based upon renowned doctors. As I said earlier: you have no understanding about science for medicine: start by learning to differentiate between chemist and doctor.Do you understand the difference between treating a disease and treating a patient?

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