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Analysis: Google to launch netbook and smartphone

Just what is Google's grand strategy?

There may still be ongoing debate about whether the Nexus One smartphone will be supplied direct from Google, but that hasn't stopped experts from moving on to a new rumour that Google is also developing a Google-branded netbook.

Assuming the rumours are true, it begs the question of what Google's larger strategy is, and what its vision for the future looks like. Developing and marketing hardware are not what we expect from Google.

From its origins as a web search engine, Google has branched in a number of directions, but traditionally those directions have still been software-oriented, and web-centric. Most people would be shocked to take a look at the Google Products page and see just how many different applications and services Google provides.

Recent acquisitions by Google, like AdMob and Teracent, fit the mold of what we expect from Google because they expand the scope of Google's advertising empire. Those purchases - especially when combined with the expansion of Google's personalised search - enable Google to work on delivering more targeted advertising, and stretch beyond the web to delivering ads via mobile platforms.

Moving into the operating system arena - first with the Android mobile operating system, and following it with the Chrome operating system - challenged the traditional Google paradigm and left many wondering what Google has up its sleeve. Google Android is establishing itself as a serious contender in the smartphone market, and the Chrome OS is generating a lot of early buzz.

See also: First Google phone to be called Nexus One?

See all: News stories about Google

Now we are getting into hardware - both mobile handsets and netbooks. It seems out of character at first glance, but when you step back and look at the bigger picture rather than at individual acquisitions or development projects it starts to make sense.

No. Conspiracy theories aside, this is not an attempt at world domination by Google. Google does want to dominate, but just certain market segments, not the world. It's all about advertising revenue, and improving the web-experience for users so it is more acceptable as a computing platform... and ad revenue.

Venturing into Google-branded hardware, and working so closely with the hardware manufacturers on design specifications, sounds like a strategy straight from the Apple playbook. Perhaps that isn't a coincidence. Until recently Google execs were active on the Apple board of directors, so they are familiar with Apple strategy.

By developing hardware that is specifically designed to maximize the potential that Android and/or the Chrome operating system are capable of, Google can manage the user experience and help ensure the success of those platforms. It is a similar strategy to the way Apple controls the software development and hardware platforms for its products, like the iPhone and the Mac, to protect the user experience.

There are a number of ways that Google can benefit from the success of those platforms and leverage Android and Chrome OS to generate ad revenue. One possibility is that rather than subsidizing the hardware through wireless carriers like other mobile handsets and netbooks, Google can subsidise the hardware itself through ad placement.

Perhaps Apple should have learned from Sun Tzu and followed the wisdom to "keep your friends close, and your enemies closer". Now it finds itself having to follow a different proverb - "the enemy of my enemy is my friend" - and turn to Microsoft to defend against the Google onslaught.

However the Google strategy plays out, it will be interesting to watch the dance between Google, Apple, and Microsoft, and see where it all leads.


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