GOOG: Don’t Just Make Google Glass. License It.

by Brad Moon | November 13, 2013 2:05 pm

A recent Gartner report points to Google’s (GOOG[1]) Google Glass having a big future in the workplace. It suggests Google Glass could become a fixture in surgery, fixing cars, manufacturing and other settings[2] — and that it could save companies $1 billion yearly by 2017.

Google Glass 300x200 GOOG: Don't Just Make Google Glass. License It.[3]But I’m going to go out on a limb and say Google shouldn’t make Google Glass for the workplace.

Sure, GOOG should continue developing the hardware and stick to selling an all-purpose Glass, but for other applications, Google actually would be better off licensing its Glass technology.

As the Google Glass Explorer program has expanded, we’ve seen some amazing examples of uses for the augmented-reality glasses. Ohio State University has equipped surgeons with Google Glass[4] to video orthopaedic procedures, while the Wall Street Journal ran a piece showing how Google Glass was used to let remote Indian surgeons webcast a procedure to specialists[5] who were able to offer real-time advice. These cases and others illustrate the potential of the technology.

Commercialization is a different story.

The Limits of Limitless Google Glass

Standard-issue Google Glass specs have been designed to appeal to consumers. They will have a price tag that balances capabilities with affordability, and they’re being developed with existing eyeglass frames in mind. Much of the customization of the Google Glass experience will be software-based — built for personal use, but sufficient to have real potential in a typical white-collar, business environment.

However, software and apps alone won’t be sufficient to see the high-tech specs deployed in specialized real world situations like the operating room.

Think of some of the requirements for equipment used in the OR. It should be waterproof and needs to stand up to sterilization. Hypoallergenic and resistance to corrosion come up frequently. In addition, some procedures call for the use of glasses-mounted surgical loupes (magnifying optics) that won’t play nicely with Google’s gear. Even in the current Explorer phase, medical users have pointed out flaws including low image resolution, awkward camera positioning and poor battery life.

In short, Google would have to do a lot of work to come up with a version of Google Glass that would cut it as standard issue in hospitals.

Security officers, police and the military represent another group that could benefit tremendously from the Google Glass experience. These users will have special needs too — anything from more rugged hardware to extended battery life or heavy duty encryption. In addition, they might use eyewear like night-vision goggles or protective headgear that would physically interfere with the ability to wear Google Glass.

Google surely would be able to get away with a hefty margin if it developed Google Glass for medical use or a militarized option, or any other specialized field. But I don’t think it should.

Besides confusing buyers with too many choices, there’s a big risk of becoming distracted by building multiple iterations of Google Glass. There are countless niche markets, each with their own specific needs. Google doesn’t necessarily have the expertise to do it right, and production costs increase with customization.

Also, once you get into highly specialized use, Google isn’t likely to see much ad revenue upside. Joe Public wearing Google Glass might use the specs to search for a nearby restaurant, contributing to Google’s all-important mobile ad revenue. A surgeon using Google Glass to broadcast an operation to a group of medical students? Not so much.

If the only profit to be had is the initial sale, why knock yourself out building it? On the other hand, you don’t want to abandon a market altogether and give competitors room to move in.

The best option?

License Google Glass Technology

Let the companies already active in those specialized markets incorporate Google Glass in their products with the flexibility to make changes where needed. The end users are likely to be happier with the results.

If Google licensed the technology, it wouldn’t bear the development or marketing costs. Granted, it would miss out on hardware sales … but if it actually charged for the technology this time, instead of giving it away for free like it does with Android, Google Glass could become an ongoing revenue stream.

Using the medical example once again, convincing hospitals to invest in pricey Google Glass built for the OR, or making do with the regular “consumer” version could be a tough sell. But what about just paying a little extra for surgical loupes from a regular supplier that happens to have Glass functionality built in?

That has potential.

Google still stands to make plenty of money selling Google Glass to consumers and general business users.

But by licensing Glass technology to third parties instead of trying to tackle specialized markets itself, Google has the opportunity to secure a non-ad revenue stream while cementing its place as the leader in augmented-reality glasses.

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

Endnotes:
  1. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  2. Google Glass could become a fixture in surgery, fixing cars, manufacturing and other settings: http://money.cnn.com/2013/11/11/technology/google-glass-report/
  3. [Image]: http://investorplace.com/wp-content/uploads/2013/11/Google-Glass.jpg
  4. has equipped surgeons with Google Glass: http://abcnews.go.com/Technology/google-glass-assists-surgeons-medical-students-ohio-state/story?id=20109218
  5. webcast a procedure to specialists: http://blogs.wsj.com/indiarealtime/2013/09/20/google-glass-could-help-doctors-in-rural-india/

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