Just maybe, it's time for suppliers to turn their eyes in Google's direction. If you look more closely at the acquisition run the company's been on lately and for the last couple years and connect dots in direct and/or abstract ways, there might well be a bigger supply chain play taking seed.
Google may have won Wall Street over with its search engine capabilities, wowed phone and tablet makers with its Android operating system, got the tech geeks going gaga with Google Glass, and has forever changed the way the rest of us think of maps and GPS. However, for most electronics companies in the business of buying, selling, and moving components around, Google's that huge, deep-pocketed tech company occupying a large piece of land in Mountain View, Calif., and many other corners of the world.
Could it be possible that Google — the so-not-typical-OEM to date — may one day migrate to top-tier OEM status? And if that day comes, how attractive could that bill of materials budget be for, say, chip, sensor, memory makers, and contract manufacturers?
Google is obviously paying close attention to the “Internet of Things” buzz that's got everyone excited about the high-tech's next phase of evolution. And it is figuring out how to elbow into the widely talked about, nascent-but-promising markets of home and car automation, artificial intelligence, and cloud-connected mobile health devices.
You only have to look at what Google now has listed in its mergers and acquisition portfolio and the technology it's introducing to see how far out the company is willing to take it's investment and research and development dime. Here, I'll randomly spout off a few that immediately come to mind: Android, Motorola Mobility, Waze, and in case you missed the headlines these last few weeks, smart thermostat and smoke detector maker Nest Labs and artificial intelligence company DeepMind. On the product side, we have self-driving cars, Google Glass, and “smart contact lenses” coming out of Google’s not-so-secret lab.
This Washington Post column makes a good case for why these moves make sense from an investment standpoint, noting something that would be fairly evident to anyone working in the high-tech sector:
When big tech-driven firms make acquisitions of this sort, they are doing so for very different purposes than investors do. They are acquiring engineering talent. They shave off years of research and development with a known outcome, rather than a who-knows-what outcome years down the road.
So, could we make a similar leap to the electronics supply? Maybe.
Let's flip this around and filter it through the collective memory of the electronics industry. Mighty OEMs rise and fall. Remember when everyone wanted to be a BlackBerry supplier? And now with the Microsoft-Nokia deal, suppliers are probably going to be wooing a company that recently was a software outlet but now stands to be one of the world’s largest chip buyers. If Google's investing billions — billions — of dollars on mergers and acquisitions and prototyping products at Google Labs, you've got to think there's going to be some product ramp here, no? Sure, Google provides some of its technology as open-source, partners with companies that have more experience in the manufacturing space (Motorola and Samsung, for instance), and has even inked a broad, long-term deal cross-licensing patent deal with Samsung.
What's stopping Google from eventually designing a great product, turning its BOM over to a contract manufacturer, and putting its logo on the device? Of course, it's much cooler to be a tech company that comes up with cool designs and leaves them in the hands of others to develop further. But, Google has a bigger vision than that, and I think it may impact more suppliers soon enough. Who knows? What do you think? Maybe we could all use a pair of Google Glasses to get a better picture of what's in Google's headspace.