Google of a Mistake

Yesterday Google launched Nexus One - a terrible mistake in my opinion and here is why.

Over the last twenty years we have seen various hardware devices become commodities. CD players, DVD players, PCs, mobile phones, laptops, digital cameras have all gone from luxury to commodities in no time. The value in the consumer electronics solution space has consistently moved from hardware towards application and usage. Game consoles are loss leaders to sell video games. Phones are loss leaders for telco providers to sign up users and offer them value added services. Some even say that digital cameras are loss leaders for people to buy memory cards...just like printers are loss leaders for those freaking ink cartridges that cost 60% of the price of the printer. The money is in the application not in the plastic.

Google makes money selling ads and they are likely the best at doing it. As more and more devices allow consumers to surf the web the potential to display an ad to a consumer is increasing dramatically month after month and year after year. The opportunity and the market is increasing and it requires innovation to make it captivating for us consumers. Google should have spent its time and money ensuring that they continue to excel in that area.

Sure Apple sells hardware and is getting more and more into the application and the advertising space. But they started in hardware and have a well established brand there. By entering the more valuable application and value added space they are making a wise move into an area that is clearly where the money is.

By entering the hardware market Google is not taking a step forward. They seem to be going only after creating brand value and a splash. Maybe a good short term decision but not a wise long term strategy. Nobody with good sense could think that making a piece of hardware is where the money is. Again, Google's brand is well established, and continues to be, as it has come up with innovative applications and solutions for online advertising. They need to continue innovating in that space to avoid a diminishing brand...not by entering into the competitive, dog eat dog, commodity hardware market.

Leave it to those who specialize in that area.....and stick to your true value. Don't take a bite of the poison apple even though it seems so enticing.

Let me know what you think about what you have just read. Please and thanks!