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Google Tries ‘Made in the USA’: Who’s Next?

{complink 2294|Google} says it is not making a political statement, but the company's decision to “design and manufacture” one of the two devices it introduced today in the United States nevertheless will sound like a clarion call to arms as it stakes out numerous fronts in an intensifying war for market share in the wireless devices market.

That struggle has recently led the company even deeper into the electronics hardware market. It developed the Android operating system to challenge {complink 379|Apple Inc.} in wireless handsets, acquire Motorola Mobility partly to gain patents and armor itself against lawsuits, and today launch two hardware devices, including a tablet PC and media player.

A report in The New York Times indicates Google isn't hesitant about engaging in some subtle propaganda messaging too. Google's Nexus Q media player (launched today), had the words “Designed and Manufactured in the U.S.A.” inscribed into its base, according to the New York Times article.

Google executives said the company decided to manufacture the Nexus Q, a wireless device that can stream music and video from You Tube when connected to a TV or a speaker system, in the US because “we've been absent for so long, we decided why don't we try it and see what happens?” Andy Rubin, the executive cited reportedly claimed Google “was not engaged in a crusade.”

Google may not be interested in a crusade but it may have started one, wittingly or unwittingly. The subject of where US-headquartered companies manufacture their devices is a touchy one in the country and many enterprises have had to withstand withering criticisms leveled by folks angered by the outsourcing of production jobs over the last 20 or so years to lower-cost centers in the Far East and Eastern Europe.

Google's claim that it is merely testing the feasibility of local manufacturing notwithstanding, the ramification of its moves are huge for electronics companies, including rivals like Apple and {complink 11480|Amazon.com Inc.}, with which it is now locked in a nasty fight for market share in the wireless devices market. Today, Google also unveiled its first tablet PC, a seven-inch screen device many believe is aimed squarely at Amazon's Kindle tablet and smaller form rivals like the Nook from Barnes & Noble.

Will Google follow the Nexus 7 with a larger tablet PC to take on Apple's iPad? I believe this is very likely. At least, I won't be surprised if Google starts selling a larger tablet PC. The Nexus 7 tablet PC from Google was manufactured in Asia, unlike the Nexus Q media player. But what if Google finds — from the Nexus Q experience — that a locally produced device can be profitable and competitive against rival equipment made elsewhere? That may move the company to start manufacturing both the Nexus 7 and a larger variant in the United States, putting pressure on rivals to seriously consider the hidden benefits of local production.

51 comments on “Google Tries ‘Made in the USA’: Who’s Next?

  1. Nemos
    June 27, 2012

    that a locally produced device can be profitable and competitive against rival equipment made elsewhere?”  

    And it will be a critical hit in sales for its rivals. Of course, the locals will support a local company, especially in these uncertain times (High unemployment rates).

  2. SunitaT
    June 28, 2012

    Google's Nexus Q media player (launched today), had the words “Designed and Manufactured in the U.S.A.”

    @Bolaji, I am not sure if its is possible to prepare truly made in USA device because I am sure Google would have re-used already existing design modules and its very hard to check the if the design was outsourced or not. 

  3. SunitaT
    June 28, 2012

    the locals will support a local company, especially in these uncertain times (High unemployment rates).

    @Nemos, it will all depend on how Google will price its new product. If Google prices its new product comparable to its rival products I am sure people will prefer locally developed devices.

  4. Eldredge
    June 28, 2012

    Undoubtedly there will be non-US content, but it is nice to see a product planned for manufacturing here. I hope it is a successful venture.

  5. FLYINGSCOT
    June 28, 2012

    I beleive the Made in America marketing trick is a winner and people will pay more for the brand (assuming of course the product is decent).  It will be interesting to see how it pans out and who follows their lead.

  6. owen
    June 28, 2012

    It has to be a trick that works in the global market as well. International sales accounted for 64% of APPLE'S revenue last quarter.

  7. Ashu001
    June 28, 2012

    Scot,

    You will be amazed how many consumers(Globally) actually welcome this move to bring back-“Made IN America” products.

    Even today,Made in America is synonymous with High Quality Products while “Made in China” is equivalent to Cheap quality and defective products.

    Frankly speaking this is a great,great move and I am sure consumers globally will welcome it.

    Especially if the Quality is superior to Made in china products.

    Regards

    Ashish.

  8. Ashu001
    June 28, 2012

    Bolaji,

    This super-smart move by Google could not have come at  a better time.

    China(especially the part where all the Electronics manufacturing happens) is blowing up because of serious tension between Immigrants and Residents.

    http://www.bbc.co.uk/news/world-asia-china-18622350

    Google just moved ahead to secure their Supply-Chain Big-time!

    Good Job Google!

    Looks like Apple is going to have to do Catch-up here!

    Regards

    Ashish.

  9. Susan Fourtané
    June 28, 2012

    Flyingscot,

    Indeed, nice marketing trick. I woudn't be sure if Apple, for example, would follow the lead. But Google's move may represent a fast track in its sales in the U.S. In order to support local manufacturing Americans might choose a Google tablet over the others in the market. I don't think this will influence Apple customers, though. 

    -Susan 

  10. Nemos
    June 28, 2012

    Why you think it is a marketing trick instead of a “real” strategic choice of Google ? 

     

  11. Anna Young
    June 29, 2012

    Tirlapur, I agree if the price of Google's product compares favourably, the quality is high, I'm sure it'll be preferred locally. But will it create a dent in Apple's product?. Even if it did, can the impact be significant? I think this move will not threaten Apple's product because it's not clear where this might lead. It is indeed a giant move. It may force the hands of other major players to rethink  moving their productions in part back to local shores. We just have to see how it works out.

  12. syedzunair
    June 29, 2012

    Susan, probably the consumers might buy local products manufactured by Google compared to other ones'. But I think the price would be the decisive factor. With the cost of labor high in the US compared to other manufacturing areas I think the overall cost of Google products might equal those of the Apple products. 

  13. Ashu001
    June 29, 2012

    Rich,

    Sometimes for me,it gets really confusing to decide if you are being Serious or being Sarcastic[That's one of the big disadvantages of Social Media];U cant (as of yet) sense Emotions of the other person.

     

    My Sense is you are being Sarcastic here.

    Don't be.

    The tide is changing decisively in favor of US Manufacturing today(especially to serve American Consumers);primary reason is Logistics and Cheap Energy(thanks to the Shale Gas boom).

    Regards

    Ashish.

     

  14. Susan Fourtané
    June 29, 2012

    Rich, 

    “Hey, wait a minute. Can Americans even find the US on a map? You could put a map of Finland on the case and mark it “USA,” and no one would know.”

    True. I have some stories about real cases. On the other hand, Finland is so small that they would think the map marked as U.S.A. is only the Amercan state where Google has its new U.S. manufacturing site. 

    -Susan 

  15. prabhakar_deosthali
    June 29, 2012

    The real test of whether Google is successful with its Made in America strategy will be in the board room. If Google is able to convince its investors that American manufacturing is as profitable as in off-shore countries then definitely this will turn a new leaf in American manufacturing

  16. Eldredge
    June 29, 2012

    @prabhakar – you are absolutely correct. I hope the board room takes into account all of the costs for a fair comparison.

  17. Susan Fourtané
    June 29, 2012

    Hi, syedzunair

    The New York Times reports:

    Harold L. Sirkin, a managing director at Boston Consulting Group, said, “At 58 cents an hour, bringing manufacturing back was impossible, but at $3 to $6 an hour, where wages are today in coastal China, all of a sudden the equation changes.” The firm reported in April that one-third of American companies with revenue greater than $1 billion were either planning or considering to move manufacturing back to the United States. Boston Consulting predicted that the reversal could bring two million to three million jobs back to this country.” 

    So, if the labor cost has changed in China, it seems more likely that Google might keep the manufacturing prices in line, instead of trying to equal those of Apple. 

    Apple consumers will always remain Apple consumers, and that will not change. An Apple consumer will not buy a Google tablet. If Google wants to reach those who will buy a tablet in the follow months the price of the products, if manufactured in the U.S.A., has to be something lower than the iPad.

    For now, the only product marked as Designed and Manufactured in the U.S.A. is the Nexus Q. So we might want to focus only on this one for now. I haven't seen the price of the Nexus Q, have you?

    -Susan  

  18. Houngbo_Hospice
    June 29, 2012

    Hi SF,

    For now, the only product marked as Designed and Manufactured in the U.S.A. is the Nexus Q.

    It might be too early to conclude that many other manufacturing companies will follow Google's example, so soon. But it is a good start, isnt it?

  19. Houngbo_Hospice
    June 29, 2012

    @SF'

    Apple consumers will always remain Apple consumers, and that will not change. “,

    What makes you say that? Apple's dominance in the smartphone and tablet market started just a few years ago mostly due its revolutioanry products, but things can change very fast. The next revolutionary device may not be an Apple product.

  20. SteveCummins
    June 29, 2012

    First and foremost, it's a great PR move for Google. At a time when people are no longer taking their “Don't be Evil” motto seriously, this gives the company a nice halo effect for a while.

    But Google is also a smart company, and they would not be doing this if financially it was a big loser.

    There's been a noticeable shift over the last year or two towards “reshoring” (including Mexico) for a number of reasons, including a more even total cost comparison vs China. For a high profile company to make such a move, it sends a messge that the shift is real. Hopefully it will make it politically easier within the boardroom for other companies to make a similar move.

  21. Houngbo_Hospice
    June 29, 2012

    @prabhakar,

    When we have a look at the huge profits Apple and Google are making with their “made outstide the USA”, products, I have the feeling that they can still manufacture in the USA and get reasonable profit margins, don't you think?

  22. Susan Fourtané
    June 29, 2012

    Hi, HH 

    Indeed, it's a good start. If it's like the New York Times reported, we should start looking at this in a positive way. We'll see what happens with the Nexus Q sales, and how the U.S. market responds. Do you know the price of the Nexus Q? 

    -Susan 

  23. Houngbo_Hospice
    June 29, 2012

    @SteveCummins,

    I am not defending Google, but I think they are doing their best to abide by their motto “Don't be evil”. 

    Having said that, the message Google is sending is clear :  “We care for the economy of the country that has made us what we are today”. We may argue that a company is beholden to its investors, not to its country, that is right. But there is always a “patriotism spirit” in each one of us.

  24. Susan Fourtané
    June 29, 2012

    HH, 

    Change is always possible when there is still life. 🙂 Something similar to what happens with hope, remember? 

    What makes me say that Apple consumers will always remain Apple consumers, and that will not change  is how I see Apple products evolving, and how rapidly I see iOS app developers develop and improve apps. Apps can be something that many consumers will always take into account at the time of choosing a tablet, so it's not only the hardware what counts here, not even the price in some cases. 

    “The next revolutionary device may not be an Apple product.”

    Is there one that you can already think of as a revolutionary device, not being an Apple product? 

    -Susan 

  25. Houngbo_Hospice
    June 29, 2012

    SF,

    Is there one that you can already think of as a revolutionary device, not being an Apple product? 

    It is not that I can point to a device right now, but chances are that Apple will be facing more competitions in the smartphones and tablets market. For instance, I was about to upgrade my iPad (I stll have iPad 1), but with MSFT's new Surface and Google Nexus 7 tablet, getting an apple tablet is no longer my only choice. What if many other users were thinking like me?

  26. Houngbo_Hospice
    June 29, 2012

    @SF,

    According to this article, the The Nexus Q will cost $299 and it will be released in mid-july in as well as the Nexus 7 tablet. When will the next Apple device be released? I don't think it will be any time soon.

  27. Susan Fourtané
    June 29, 2012

    HH, 

    Yes, you have a good point as the iPad is not the only tablet option any more as it was at the beginning. But again I have to point out at the apps. Do you think you wouldn't miss your iPad apps if you switch to a Surface or a Google Nexus? 

    Have you already checked out the Surface? I haven't, so I can't tell anything about it yet. It's on my To Do list, though, together with the new Mac. 🙂 

    -Susan 

  28. Houngbo_Hospice
    June 29, 2012

    @SF,

    “Have you already checked out the Surface? I haven't, so I can't tell anything about it yet. It's on my To Do list, though, together with the new Mac.”

     I have checked the specs of the Surface and I think that it is very appealing. If the MT (Metro version) costs about the same as the iPad. I am in. 

  29. Susan Fourtané
    June 29, 2012

    HH, 

    Mid-July is just around the corner, so pretty soon we are going to see how the U.S. market reacts to the Nexus Q. I don't have any particular interest in this product, though, other than the fact that it's the first Designed and Manufactured in the U.S.A. Google product, which makes it interesting.  

    -Susan 

  30. bolaji ojo
    June 29, 2012

    Taking this farther. There's “made in the USA” but there's also “made in Europe”. This is taking place more than many of us think in certain niche markets. We will be blogging on this with examples on EBN over the next weeks.

  31. bolaji ojo
    June 29, 2012

    Hospice, As somebody else has mentioned, Apple and many of its competitors sell a higher percentage of their products outside the United States so the idea of where the products are made would be less important for these “foreign” buyers. However, for the American market, this is a sensitive subject although it hasn't negatively impacted Apple so far.

  32. Susan Fourtané
    June 29, 2012

    HH,

    Thanks for the link. It seems like the Surface MT is expected to cost about the same as the iPad, and will be its competitor. Now I am very curious to know why you are going to change your iPad for the Surface?  

    -Susan 

  33. prabhakar_deosthali
    June 29, 2012

    @H_H,

    Yes I agree!

    But whether the investors and stock holders will be satisfied with those ( slightly thinner) profit margins , is the question that time only will answer

    Just now  it is a wait & watch for others ready to follow Google

  34. Susan Fourtané
    June 29, 2012

    Hi, Bolaji 

    That sounds interesting. Something like Made in the U.S. Vs. Made in Europe Vs. Made in China? 

    -Susan 

  35. Barbara Jorgensen
    June 29, 2012

    It will also be interesting to see if the Made in the USA label still stands for quality, the way it did the last time the US rallied behind its products (at that time they were made in Japan.) True, Google might develop goodwill (or badwill) depending on where you reside. But globally, the quality will be the differentiator in terms of what the label means.

  36. syedzunair
    June 29, 2012

    Hi Susan, 

    You've shared some great info! I agree with you if the prices in China have increased significantly production for the US based companies would come back to the US. 

    Like you I also believe that Apple consumers are very loyal and will not buy other products. Hence, if Google wishes to capture the tablet market it has to catch the attention of those who seek gadgets in a specified range. Since, Apple products are based on premium pricing these consumers will have to settle for other options. If Google pitches them the right product at the right price it might do the trick for them. 

    No, I haven't heard about the prices for Nexus Q. Will try to find out though. 

  37. syedzunair
    June 29, 2012

    True. The Made in USA label will have to stand out on the basis of quality. Assuming that the manufacturing price of a certain product is same or a bit higher in the US as it is elsewhere but the quality is up to the mark. Then, I believe the consumers in US will buy products manufactured within their country. 

    But, globally like you said quality is the differentiating factor. 

  38. Susan Fourtané
    June 30, 2012

    Rich, 

    Then improve education in the U.S. so everyone knows the map. 

    In what trouble is Finland? 

    -Susan 

  39. Susan Fourtané
    June 30, 2012

    syedzunair, 

    Here in this link is the price and specs for the Nexus Q, $299, available mid-July. 

    -Susan

  40. ahdand
    June 30, 2012

    I think made in USA will geneate more busines than others if they can get it right.

  41. Susan Fourtané
    June 30, 2012

    Rich, 

    Would you care to explain? 

    -Susan 

  42. SunitaT
    June 30, 2012

    But will it create a dent in Apple's product?

    @Anna young, why not. When Samsung products like Samsung Galaxy can give tough compeitition to Apple why not google products ? I think those companies which innovate and provide new unique features will definitely capture the larger market share.

  43. syedzunair
    June 30, 2012

    Susan, thanks for sharing the link! 

    But don't you think $299 is quite high for an Android tablet? 

  44. Susan Fourtané
    June 30, 2012

    syedzunair,

    The Nexus Q is a media player device, not a tablet. 

    -Susan

  45. Anna Young
    June 30, 2012

    @tirlapur, I agree, this is what the consumer want. Rather than allowing Apple to capitalise on the large market share, it's time the likes of RIM,Nokia and HP too wake up to this realisation to provide quality innovative product at a highly competitive prices.

  46. syedzunair
    June 30, 2012

    Susan, I'm sorry I got it mixed with Google Nexus 7 tablet. 

  47. t.alex
    July 1, 2012

    Not sure what Google is trying to prove with its made-in-Usa coming products like Nexus Q and Glass. Apple has been proven sucessfully manufactured outside Usa with strong control of the process.

  48. bolaji ojo
    July 1, 2012

    RIM may have fallen off the market rim. Perhaps Nokia still stands a chance.

  49. Daniel
    July 2, 2012

    Bolaji, they are releasing the product with a tag of “Design and Made in USA”, but they are undisclosure about the place of manufacturing. So what's the credibility of their statement, I think it's just like an eye catching, another thing is as of now Google doesn't have any hardware manufacturing facility and hence that part is outsourced.

  50. bolaji ojo
    July 2, 2012

    Jacob, The actual production is actually taking place in the U.S. The location is known but they have not disclosed the contract manufacturer.

  51. Daniel
    July 4, 2012

    “The actual production is actually taking place in the U.S. The location is known but they have not disclosed the contract manufacturer”

    Bolaji, any particular reason for not disclosing this. My personal opinion is with proud they have to announce the places, inorder to justify the claim “Design and Manufactured in USA”.

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