Google Guns Harder Into Hardware Arena

by Brad Moon | February 25, 2013 12:23 pm

Last week, I wrote about why Google (NASDAQ:GOOG[1]) needs to open its own flagship retail stores[2]. As it shifts towards becoming a full-fledged consumer electronics company, Google needs a place where it can display its products … and where consumers can try them out and buy them on the spot.

Plus, as it shifts, Google is becoming a more direct — and serious — competitor to hardware-focused and retail-oriented Apple (NASDAQ:AAPL[3]). And how you going to convince the average consumer that they should buy a Nexus tablet or smartphone instead of an iPad or iPhone if they never get a chance to play around with the gadgets?

This is especially true in the case of Google’s latest gadget: the new Chromebook Pixel. The recently announced product is stepping up the tech showdown, which further increases the need for a physical retail presence.

Google first introduced the Chromebook line of notebook computers in 2011. The idea was simple: Use Google’s Chrome operating system, an Internet connection and modest PC specs to build a fast-booting, lightweight, inexpensive notebook computer.

Chromebooks come pre-loaded with Google’s Chrome web browser and rely on the web and Google’s online services for everything from applications to storage. They represent something of a bridge between a tablet and a PC notebook, sacrificing horsepower to offer a modest tablet price with much of the functionality of a traditional laptop.

At the same time, these machines keep the user closely tied into Google’s services, which is critical to boosting the online ads that make up 96% of its revenue[4]. 

While the Chromebok was largely seen as a swipe against netbooks[5] (remember those?) and a more useful alternative to a tablet, it was also a shot over the bow of Apple (NASDAQ:AAPL[3]) and its popular MacBook Air line of ultraportable PCs. 

Chromebooks are offered by a variety of manufacturers, including an 11.6-inch model from Samsung (PINK:SSNLF[6]) that very closely resembles Apple’s MacBook Air, starting at just $249[7]. It weighs 2.42 pounds, offers 6.5 hours of battery life and boots up in under 10 seconds.

Apple’s base-model 11.6-inch MacBook Air weighs 2.38 pounds, offers 5 hours of battery life and offers instant-on (from sleep). They have the same display resolution too, but while the Samsung offers just 10GB of flash storage and an ARM (NASDAQ:ARMH[8]) mobile processor, the base MacBook Air offers 64 GB of flash storage and sports an Intel (NASDAQ:INTC[9]) Core i5 processor.

Then again, it also starts at $999. 

For someone who wants a second PC around the house for surfing the web, playing online games, watching videos, checking e-mail and editing the occasional document using GoogleDrive, the Chromebook makes a compelling case thanks to its price advantage over both the iPad and MacBook Air. But for power and versatility, Apple’s offering is clearly superior … while also offering a little premium swagger. 

With the surprise announcement of the Chromebook Pixel, Google has taken such a competition with Apple to the next level. (And for good measure, its new flagship targets Microsoft (NASDAQ:MSFT) as well.)

Like the MacBook Pro with Retina Display[10] models Apple released in 2012, the Chromebook Pixel features an amazingly high-resolution screen. In fact, it one-ups Apple, with a 12.85-inch display at a resolution of 2560 x 1700, offering 4.3 million pixels and a 239 pixel-per-inch density that beats the 13-inch MacBook Pro with Retina Display’s 227 ppi.

Also borrowed from Apple’s playbook, this Chromebook is machined from anodized aluminum. It weighs 3.35 pounds (less than the 13-inch Apple), packs an Intel core i5 CPU, 4GB of RAM and a 32GB SSD. It’s available with built-in LTE and includes 1 terabyte of GoogleDrive storage. It’s powerful, with premium build quality and some very high end features. 

Stealing some of Microsoft’s Windows 8 thunder, the Chromebook Pixel’s display is a Gorilla Glass, multi-touch screen, giving users the ability to touch, swipe and pinch — something no Apple laptop can do. 

But the Chromebook Pixel starts at $1,299 for the Wi-Fi version and $1,449 for the LTE version — significantly more than the base MacBook Air, more than a Microsoft Surface Pro, more than many touch-capable Windows 8 Ultrabooks and getting close to the price of Apple’s MacBook Pro with Retina Display.

Will users pay that kind of money for a device that relies on the web for much of its functionality and lacks many of the capabilities that Mac and Windows PC users take for granted? Will touchscreen capability on a vertical display (rather than a horizontal tablet form factor) prove to be a must-have feature? Apple’s late CEO Steve Jobs certainly didn’t think so, deriding its “gorilla arm” effect[11] … but then again he was wrong about thinking no one would want a 7-inch tablet. 

Tech journalists are split on the new device. ZDNET’s Howard Lo calls it “Microsoft’s delight,” expecting razzing of the Chromebook Pixel to take the heat off Microsoft’s Surface Pro[12] (which has been put through the ringer for being expensive and not as useful as a full-blown Windows laptop), while GIGAOM’s Kevin C. Tofel says he is “blown away” after using Google’s new flagship Chromebook[13]. 

Whatever the verdict, the Chromebook Pixel is a success in one way regardless: It’s proves Google is all-in on the hardware game.

That being said, it now — more than ever — needs a dedicated retail presence to start showcasing these products as it tries to take on Apple, Microsoft and the other players in the mainstream PC and consumer electronics industries. 

As of this writing, Brad Moon did not own a position in any of the aforementioned securities.

Endnotes:
  1. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  2. needs to open its own flagship retail stores: http://investorplace.com/2013/02/why-google-needs-to-open-retail-stores/
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. make up 96% of its revenue: http://slant.investorplace.com/2013/01/google-is-getting-evil-goog/
  5. netbooks: http://gizmodo.com/5972429/asus-and-acer-the-netbooks-is-dead
  6. SSNLF: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSNLF
  7. starting at just $249: http://www.google.com/intl/us/chrome/devices/landing.html
  8. ARMH: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARMH
  9. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  10. MacBook Pro with Retina Display: http://investorplace.com/2012/06/thursday-apple-rumors-13-inch-retina-macbook-pro-coming/
  11. deriding its “gorilla arm” effect: http://www.wired.com/gadgetlab/2010/10/gorilla-arm-multitouch/
  12. take the heat off Microsoft’s Surface Pro: http://www.zdnet.com/googles-pixel-chromebook-is-microsofts-delight-7000011653/
  13. “blown away” after using Google’s new flagship Chromebook: http://gigaom.com/2013/02/23/chromebook-pixel-video-review/

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