The Google Pixel Phone won’t succeed. Here’s what they should have build instead.

Most pundits got wrong what the Google Event actually meant: Google rethought its entire business model around smartphones. From Ben Thompson:

[…] artificial intelligence comes first. In that world you must own the interaction point, and there is no room for ads, rendering both Google’s distribution and business model moot. Both must change for the company’s technological advantage to come to the fore. […] the Pixel phone starts at $649, the same as an iPhone […] there is unquestionably a big margin built-in is a profound new direction for the company. The most fascinating point of all, though, is how Google intends to sell the Pixel: the Google Assistant is, at least for now, exclusive to the first true Google phone, delivering a differentiated experience that, at least theoretically, justifies that margin.

If you haven’t read the article go do that — or even better listen to the Podcast episode. I’m not here to disagree with the core message, but I will try to expand on what this means.

Why the Pixel Phone will fail

Google was always trying to built a device that could go head-to-head with the iPhone. What changed is that instead of the heavy monetary subsidy of the Nexus line, Google bundles service features into the product, namely unlimited photo upload and the new Google Assistant (Google Now on steroids). But these are fairly weak differentiators:

• Photo uploads are already free (Google does resize photos that are above 16 MP, but not-photographers-eyes are challenged to see the difference).
• Intelligent voice assistants are among the vast reasons to buy a smartphone not in the Top 5 for the casual buyer. Maybe not even in the Top 10.

Let’s try to remember the Nexus line. Google was never artificially limiting the supply, if you wanted one you could get one. But their message resonated with only a niche group of techno enthusiasts. In terms of market share very few devices were sold. Now you take away the financial motivation through cheap pricing — Why on earth should the new effort be more successful?

But you say this time Google will go through carriers and will do all the hard work to place this phone in front of everybody! Well, we’ll see. There are two ways to get customer attention (very simplified):

1. Consumers will demand your product from carriers and wholesale till they get it in stock (basically how Apple got into the market). To change customer pull the Pixel had to be a generation ahead in terms of specs and user experience. This is not the case, you can even argue if it’s on par with the latest iPhone generation.
2. You need a massive spending in marketing and advertising. Just look at the expenditures from Samsung to get where they are today (before the Note 7 fiasco). On the other hand, Googles track record in this area is incredibly bad — maybe because they never needed to get good in this area (people would simply flock to products like Search or Mail). They are off to a good start, but we need to wait to see how long their breath will be.

Google Assistant Marketing

An alternative approach

Google chose the smartphone market as their first and therefore most important playing field — I say that’s stupid.

• Apple and Samsung cornered the market a few years ago
• Assistant systems don’t matter that much in the grand scheme of things

Why not try to compete in an area where no competitor has perfected its product till now?

What comes to mind is the smartwatch market:

• Apples market entry was (especially for them) exceptionally broad and undefined. The Watch was (and still is) a shrinked iPhone. The same mistake Microsoft made with Windows mobile.
• The remains of the “wrist” market is entirely focused on fitness, if your lucky paired with notification mirroring. Now Apple seems to be the agreeing follower.

This leaves room for everybody that has another defined and focused use case. E.g. a smartwatch solely for messaging would be something.

What I imagine for Google is a new, very simple type of smartwatch, that is intertwined with your phone, but other than that works as a standalone Google Pixel Assistant.

• This puts the assistant front and center. Therefore Google can concentrate the marketing on the AI, which makes sense: The assistant amplifies Googles strengths regarding service operation and machine learning like no other product.
• I have the ad already in my mind: place Siri and a Google Assistant device next to each other and tell them both the same command (that of course goes beyond setting up a timer). A much better and actually working Siri is valued by lots of people, see Amazon Echo.
• The smartwatch is the place for context awareness & interaction with your environment. The pro-active model pioneered by Google Now (“we know what information you need before you”) fits very well.
• Every new technology wave comes with a new input method. First we got the keyboard, then the mouse and recently the touchscreen. If Google believes in AI as the new frontier, voice in wearables is the corresponding input method.
• Google can put Android Wear to rest without losing too much, the ecosystem is on life support for quite a while.
• This would also strengthen the separation between the Android vendors and Google, which got pretty blurry after the event. The smartphone OS is still for everybody and gets all features, no exception. The wearables market is for Google Pixel AI devices only.
• I think the smartwatch would be a good place to start, but a whole line of other Pixel wearables is possible. Besides the wrist, one could place intelligent objects in ears, before your eyes, or on a cube around your neck. Communication via voice makes it possible.

Maybe a smartwatch with Google Assistant will be introduced in the coming months. Hope remains, though it’s not likely: The integral part of your strategy needs to be shown early, alongside press coverage. If Google saw the watch as an important flagship product, they would have introduced us at their event. But we saw not much, not even a “coming soon” pre-announcement-device.

Let’s revisit their efforts in 12 months again. My guess: Google hardware remains for the enthusiasts and the reworked business model will fade into oblivion.