Last week, Google unveiled a variety of new products, including two new Pixel phones, during a press event that proved Google really wants to be more like Apple. For every product Apple makes, Google had a direct rival, although it also unveiled devices that have no equivalent over at Apple like smart speakers. On the software side, Google unveiled new Assistant features, as well as advancements in machine learning and artificial intelligence that seem to eclipse anything Apple is doing right now — though Apple isn’t that forthcoming with its AI and ML efforts just yet.

Now, a new report reveals that fear of Apple and the iPhone is what will force Google to put more effort into its hardware division. And who knows, maybe this year Google will even have enough Pixel units to go around.

One of the Pixel’s problems was stock. Google simply couldn’t make enough units to meet demand, which was something the company spoke about during last week’s event. The Pixel 2 is supposed to ship soon, and we’ll soon see how quickly Google can replenish stock.

It turns out that Google may be very motivated to replicate Apple’s successful hardware business. That doesn’t mean Google will keep copying Apple’s product launch strategy in the coming years. But Google may focus more on selling more smartphones and computers of its own than ever before.

Looking at Google’s financials, Bloomberg Businessweek reveals that there’s a “black box” inside Google that’s spooking investors.

That’s the annual amount that Google pays to companies that help generate ad sales, which ballooned to $19 billion. Investors are apparently obsessed with these acquisition costs that increased to 11% of Google’s revenue, up from 7% in 2012.

The report says that Google paid Apple and its Android partners $7.2 billion last year, more than three times the figure in 2012. Apple is believed to have taken a huge chunk of that money, anywhere from $3 billion to $4 billion per year, or even more. That’s how much it costs to have Google Search as the default online search engine on the iPhone and Mac computers.

That’s a fee Google is willing to pay for the time being. But it’s also great motivation to turn the Pixel line into a successful product. By selling an increasing amount of Pixel phones, Chromebooks, and Search-ready Home assistants, Google may get additional revenue to offset some of its advertising costs. Not to mention that it won’t have to pay anything to be the default search engine on these products. And who knows, in time, Google may command a decent share of the high-end mobile, PC, and home speaker markets.

In the meantime, Google’s first hardware test is just around the corner: this year’s Christmas shopping season. Let’s see if there will be enough Pixel 2 units to go around.

View Comments