Google (NASDAQ:GOOG) (NASDAQ:GOOGL) board Chairman Eric Schmidt has never been shy about pushing the envelope in the company's penchant for innovation. Its ongoing experiments with a self-driving car and those odd-shaped balloons in Project Loon (Google's effort to beam Internet connectivity to remote regions of the world) are just a couple examples.
However, Google didn't stop with the cars and balloons. Word has it Google is also working on nanotechnology that would seek out and diagnose cancer and heart disease, among other ailments. That's heady stuff, and supports the notion that Google is one of the most innovative companies on the planet.
Then there's Glass. Google's wearable initiative might have topped the innovation list; instead, after lackluster sales and consumer angst, Google shut down its "Explorer" program, which seemingly put an end to an unsuccessful bid to bring Jetsons-like devices to the world. But according to a recent interview, Schmidt simply won't let Glass die. And that's a mistake.
Knowing when to say when
Conceptualizing, let alone developing, the aforementioned innovative technologies speaks volumes about Google. But as with any company willing to take calculated risks that result in fundamental changes in the way consumers live, there are misses along the way.
Longtime Google nemesis Apple (NASDAQ:AAPL) didn't become the largest company in the world thanks to its digital assistant Newton or the wildly unpopular Pippin gaming console. And those are not even in the same innovation ballpark as nanotechnology pills, let alone Google Glass. But from a business perspective there sometimes comes a time to cut the cord -- when did you last see a Newton? -- and for Google Glass, that time has come and gone.
What's the problem?
A big concern, certainly from an investor's perspective, is there's no mass market for Glass. While the notion of a fully connected, powerful computer wearable device -- which Glass was intended to be -- has potential, continuing to pour resources into something consumers aren't interested in isn't warranted.
Although Google hasn't revealed the cost of developing Glass, let alone its ongoing overhead to build a new version with longer battery life, better sound, and improved display, it certainly hasn't been cheap. For shareholders to get a return on that investment, Glass will need to become a mainstream success, and that's not going to happen.
It could be argued there is a niche business case for Glass. It could make sense for engineers who want to view detailed 3D specs of a building while it's being built, or for doctors and other professionals needing to access reference data and communicate on the fly. But Google has put too much money and time into Glass for it to simply meet a few, specific needs. And Schmidt has made it clear: Google intends to bring Glass to the masses.
But according to IDC, by 2018 the entire wearable device market will total a (relatively) paltry 112 million units. To put that in perspective, that same year 1.9 billion smartphones are expected to be shipped globally.
The insurmountable problem
Why is there no market for Glass? After all, Glass is actually a stand-alone, Internet-connected device, unlike the new Apple Watch that has garnered so much press. Apple Watch is like virtually every other device of its ilk: It requires a smartphone to utilize most features, which include what amount to a pager and health monitor. Meanwhile, Glass has actual computing functions, including pictures, audio, and surfing the Internet.
The problems began with poor aesthetics. The first versions of Glass were simply not something most consumers would wear. Google is rumored to be working with designers to remedy the appearance problem, but the poor looks pale in comparison to the biggest concern: privacy. Nearly two years ago, even as Glass was in its earliest stages, a laundry list of industries, including banks, sports arenas, and hospitals, banned Glass.
In some instances the concerns were safety-related, but many restaurants and other public businesses banned Glass because of how uncomfortable it makes their patrons. The notion of Glass owners surreptitiously taking pictures of complete strangers and recording their conversations leaves a lot of people -- understandably -- uncomfortable.
With privacy becoming more of a concern with each passing day, overcoming that challenge could prove impossible for Glass, rendering it unmarketable. Speaking of Glass, Schmidt said, "These things take time." True, cutting-edge innovations do take time to develop, and sometimes even to catch on. But all the time in the world won't help Glass. Sometimes, Google, you have to know when to say when.