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Google (GOOG): Quit it With Google Glass And Focus on Nest

Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) needs to cut it out already. The search engine giant, famous for its wacky, hair-brained projects like driverless cars, hot-air balloons bringing internet to the world, and hoverboards is progressing to the next stage of its Google Glass project.

google goog googl quit it with google glass and focus on nest

Google Glass, the digital smartglasses that can record video, display maps, and conduct web searches, is “graduating” from Google[x] labs, the division of the company responsible for overseeing zany ideas.

The project is being put under the control of Tony Fadell, a former Apple Inc. (NASDAQ:AAPL) executive who designed the iPod and founded Nest Labs, the smarthome company.

Really GOOG? You’re gonna split Fadell’s time between a forward-looking company he founded with amazing prospects and a convoluted commercial failure plagued by privacy concerns and no coolness factor?

Just quit it with Google Glass and let Fadell focus on Nest. The writing on the wall could not be clearer.

How and Why GOOGL is Misallocating Resources

First, a quick rundown of the problems facing Google Glass:

  • Privacy concerns: the ability to sneakily record video while going about everyday life in public is a slippery slope. No one wants to constantly worry about whether someone is snooping on them while eating a burrito.
  • High price point: The Google Glass Explorer Edition, which GOOG will quit selling on Jan. 19, costs $1,500.
  • Coolness factor: Namely, there is none.
  • Developer shortfall: According to a November Reuters story discussing the fading popularity of the device, nine of 16 Google Glass app developers Reuters spoke to had abandoned their efforts. Twitter Inc (NASDAQ:TWTR) was the party with the highest profile to leave the platform.
  • Withdrawal symptoms?: One member of the U.S. Navy who used the product regularly began wearing them 18 hours a day, and told doctors the withdrawals he had after he stopped using the device were worse than those he suffered after undergoing rehab for alcoholism.

Those are not insignificant problems. On the other hand, let’s take a look at Nest, the smarthome company founded by Fadell. (GOOG acquired Nest for $3.2 billion in 2014). What does that venture look like?

  • A year ago, Morgan Stanley estimated Nest’s annual revenue at $300 million.
  • The smarthome industry is projected to be a $71 billion area by 2018, and Nest is a first-mover.
  • At the 2015 Consumer Electronics Show, Nest revealed a host of things that are compatible with the system, including services that automatically cool down your house when you leave or sleep, forward calls from your landline to your cell, and quiet your washer and dryer when you come home.
  • Nest has garnered five-star CNET ratings. Aesthetics, a simple install and the fact that consumers can save money over time as the Nest thermostat learns your cooling preferences are all cited in the review.

It’s not hard to tell which one of these two projects has the most promise. So, why, GOOG, are you taking Tony Fadell’s precious time away — time when he could be working on his baby — and forcing that beautiful mind to work on such a flawed product? I can think of only one reason: pride.

Sergey Brin, Google’s co-founder, initially presented Google Glass at a euphoric presentation in which a skydiver jumps from a plane and lands atop a building before a slew of Glass-donning mountain bikers bound around rooftops and repel to the street before making their way inside to the stage, where Brin stands expectantly.

Nearly two-and-a-half years later the project was in tatters, and Brin had still not given up on the project, despite developing a tendency to leave his Google Glass in the car instead of donning them in public.

Please, Google, no one — especially GOOG shareholders, who will likely never see Glass move the needle on the stock price — wants you to devote more resources to this product. And if handing off the project to Fadell takes his eye off of Nest and delays innovations in smarthome technology? The opportunity cost could be enormous.

As of this writing, John Divine was long shares of GOOG stock, GOOGL stock and AAPL stock. You can follow him on Twitter at @divinebizkid.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/google-goog-quit-google-glass-focus-nest/.

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