It's abundantly clear that Google (NASDAQ:GOOG) (NASDAQ:GOOGL) is so much more than just a search engine. The company is rapidly building out its business to better compete in the ongoing war for the living room. As far as Google is concerned, it's a war for the home, and the company is making moves to put it in far more areas of your house than just the living room.
Google bought smart thermostat and smoke detector company Nest for $3.2 billion, and on June 25, unveiled a broad expansion of its Android operating system at its annual I/O developer conference in San Francisco. Google is taking Android into new devices. These include three separate Android-powered watches, one of which will be the Samsung Electronics (NASDAQOTH:SSNLF) Gear Live smart watch. Other devices include Android software for cars, and an Android TV.
Google's shares rose strongly after announcing a slew of new products and services, implying a sense of optimism from investors. Here are all the exciting gadgets Google unwrapped, and how Google is arming itself in its everlasting fight with Apple (NASDAQ:AAPL).
Google fires a shot in the watch war
It appears that the Android watch is Google and Samsung's attempt to preempt Apple in the smart watch product category. Speculation abounds, but Apple is yet to formally announce a release date for its much-anticipated iWatch. In the meantime, Google and Samsung are likely hoping to get their watch in the hands of consumers, and snatch their loyalty first.
The Samsung Gear Live will be available immediately, and Google's software will be aware of the user's environment. Functionality will include the ability to monitor your health, play music, and sync apps and information with your phone.
The announcement couldn't come at a better time for Samsung, which really needs a positive catalyst working in its favor. Samsung reported operating profit that actually declined 3% in the first quarter, year over year.
Apple's iWatch now faces instant competition. It's unclear whether consumers will flock to Google's smart watch, but it's worth noting that the sales estimates for the iWatch are constantly debated. In a recent report in Barron's, an analyst speculated the iWatch could bring in as much as $4 per share into Apple's coffers, assuming a $200 price tag. The analyst expects Apple to generate 30% gross margins on the iWatch, which is fairly modest considering Apple's other core products rake in much higher margin levels.
Separately, Google announced other software innovations that are very intriguing. One is called Android Drive, which will be used in automobiles and could be rolled out by the end of this year. It will include improvements to existing navigation and communication systems, and will be controlled by the driver's voice. Of course, the biggest automobile-related innovation out of Google is the self-driving car, which Sergey Brin confirmed the company is working on.
Last but not least, Google's Android TV will also be voice activated. You will be able to talk into your phone to pull things up on your television, and you can broadcast images from your phone onto the television as well.
From a broader perspective, it's clear that Google is intent on getting its software into all sorts of devices to better compete with Apple. The war for the living room is heating up, and combined with its other initiatives, Google wants to win the war for the home.
Eventually, Google envisions a future in which nearly every device and literally each room in the household is powered by Google.
A few final Foolish thoughts
Google took the wraps off its Android watch, Google Drive for automobiles, and Android TV. The company effectively preempted Apple at its I/O developers conference. Ahead of the new suite of Apple products, which likely include a smart watch and could include a television, Google took the first stab. In doing so, it's hoping it can get its products in the hands of consumers early enough that they develop loyalty to it before Apple even has a chance.
While that remains to be seen, it's reasonable to think that the longer Apple takes to unveil its own products, the more vulnerable it becomes.
Bob Ciura owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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