One of the most interesting bits of viral news last week involved yet more far-out Google (Nasdaq: GOOG) technology. It wasn't self-driving cars or an automated house, or even a moon-roving robot -- though the famously big-thinking company has plans to make all these ideas come to life. Rather, it's Project Glass, the code name for Google's heads-up display headwear, which means to make your vision an augmented reality.
You can watch a video demo of this ambitious technology at the upcoming link, but before you scroll down, I'd like to ask an important question: What does this latest project mean for Google, its competitors, and its partners? Has the company finally found the moon shot that will secure its long-term growth and survival?
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Let's take a quick look at what Google intends for Project Glass, nicknamed "Google Goggles." I'll wait. Trust me, it's worth it.
http://www.youtube.com/watch?v=9c6W4CCU9M4
It looks pretty cool, doesn't it? Why use a smartphone when you can find out anything you need to know about the world around you simply by taking a look? I wouldn't call it revolutionary -- it's more of a sensible progression toward the sort of augmented reality that computer miniaturization always promised. My recent prediction that the world might not use a screen to interact with its devices within the next five years strikes me as somewhat timid now. Matt Groening's Futurama even came up with a similar projected display in 2010, mocking Apple (Nasdaq: AAPL) mania by having its characters cram "eyePhones" into their eyeballs. Is this a case of life imitating cartoons?
How does it work?
There are significant hurdles to the mass adoption of projected-display glasses. Hold your fingertip about an inch in front of your right eye, the approximate distance and positioning of a Project Glass display. Can you make out any detail? Now bring that fingertip an inch in front of your nose. Is it much clearer? That's the sort of technical problem that Google has to overcome without obstructing its users' field of view.
Now let's assume that it does work, that Google's talented engineers have actually come up with a way to make graphics that look as crisp as those in the video. That's just the first step. Walking around with a device that instantly tells you more about everything you see could be a much bigger distraction than having a little computer in your pocket. Overcoming the public's unfamiliarity and physical discomfort will be vital if Google ever wants to see this product succeed.
How should we view this?
I'm of two minds as to how this project could play out for Google. The first line of thought asks, "Is Google really serious about becoming a hardware company?" The second asks, "Will any of these sci-fi toys Google's developed ever reach the market?" To succeed in a rapidly changing world, the answers may need to be "yes" for both questions.
Google's hardly alone in its pursuit of wild ideas. Microsoft (Nasdaq: MSFT) has a history of throwing a lot of money into R&D with relatively little to show for it. For every Kinect there's a Surface. Billions have gone into both Xbox and Bing, with decidedly mixed results -- the Xbox may finally be profitable now, but it's also under major competitive pressure from mobile gaming, and Bing is a glorified also-ran in search. Microsoft even has its own projected display, though it's a little more tactile than Google's design.
There's a big difference between a TV-sized touchscreen and a heads-up display, of course. The former makes little sense for most users. But when you start thinking about what comes after smartphones, it's hard to imagine something that doesn't include an augmented reality interface. To make it a real reality, hardware and software will need to work together at a level well beyond that of current smartphones.
Google's not a hardware company, and it has no real track record of success bringing hardware to market. But it does own the expertise and the track record of a company that does -- Motorola Mobility. Most commentary focused on Motorola's massive patent hoard, with others pointing out the company's well-known hardware competencies.
What if Motorola's real value isn't in producing products today, but making something different tomorrow? We're all aware of Apple's meteoric ascent, and many are also familiar with the way its growth cut the previous kings of mobile off at the knees.
AAPL Revenues TTM data by YCharts
The iPhone didn't torpedo Nokia (NYSE: NOK) immediately -- and the recession undoubtedly had its part to play in shifting consumer preferences -- but it's very interesting to see that the "dumb" phone purveyor took a nosedive shortly after the iPhone's release. Research In Motion (Nasdaq: RIMM), which was once synonymous with smartphones, seems to have finally bumped up against the Gorilla Glass ceiling of the iPhone's (and, to a similar extent, the Android platform's) success. There's another trend to consider as well -- Apple's meteoric profit growth.
AAPL Revenues TTM data by YCharts
Putting it all together
All I'm trying to show here is that transforming the way people interact with their hardware can bring tremendous success. Apple took off post-iPhone as people around the world got used to the idea of a computer in their pocket. Helping to create the smartphone category also gave Apple a big patent head start, which it's zealously defended in pursuit of its interests, stymying Google's Android hardware partners wherever possible.
Now let's flip this situation around. Google becomes the first out of the gate with wearable heads-up augmented reality hardware, built in-house with proprietary design and not open-sourced like Android. It would control the patents for what is, essentially, a completely new kind of experience. It would set the tone for user control schemes and interface design, much as Apple did for smartphones with iOS.
Will consumers buy into this idea? If they do, Google might be getting the same kind of hyperbolic accolades that Apple receives on a daily basis. It's not here yet, of course. But Google investors should be very interested in the possibility. After all, creating your own category has certainly been a big winner in the past.
Project Glass isn't coming out in "Google Stores" any time soon, so the smartphone revolution should continue for some time. You still have time to make big gains from investing in this explosive category, and the hardware component suppliers for iPhones, Androids, and now Windows Phones might be your best bet. Want to find out more? The Motley Fool's put together a great report on "3 Hidden Winners of the iPhone and Android Revolution." In it, you'll find everything you need to make smart investments in the best-positioned companies inside every high-tech mobile device made today. Discover this secret for yourself now -- claim your free copy of our report.
