Google Stock Will Rely Ever More on Hardware. The Shift Has Worked
Alphabet Inc (NASDAQ:GOOG), also known as Google, has gradually started to move beyond software. The company wants to become a true hardware manufacturer. The new “Pixel” and “Pixel XL” phones are an important step in this direction. The Google car project is another, but it remains in the research and development (R&D) stage for now. The Pixel phones, rather, will be generating revenue, and it looks like they will be successful.
This shift, or rather evolution, is one that investors have welcomed. Google stock is moving higher, and is one of a handful of popular stocks heading toward the coveted $1,000 mark in 2017 or 2018. Another member of this elite club is Amazon.com, Inc. (NASDAQ:AMZN).
But this should not come as a surprise, and the recent, if temporary, Samsung Electronics Co Ltd “Galaxy Note 7” smartphone recall (a total recall, in fact) makes the new Google phones a true case of being in the right place at the right time.
It’s Not that Google Will Replace Samsung Phones
No, Google will not put Samsung out of business. Nor would Google stock benefit all that much from such an unlikely prospect. After all, Samsung doesn’t just make smartphones; it makes smart business decisions, and it will return better and stronger. But what it does mean is that Google is becoming more like Apple Inc. (NASDAQ:AAPL).
It will be interesting to see where this process leads. As for Google, such prospects could not be more enticing. It will be an epic fight. The optimism comes from the fact that GOOG stock is climbing. It’s climbing sharply because investors like the new hardware direction, and the new phones have received rave reviews.
Google Has Always Been a Company that Puts Software Ahead of Hardware
There was a logical reason for this. Google owes all its success to the search engine that bears its name. It’s both a brand and a verb, such is the extent of the company’s effect on how the world works. But the company is more than just a search engine; its “Android” operating system for smartphones has become the most popular in the world.
The fact that Android is used by so many manufacturers puts the “smart” in business, not just phones. Others can use its system, becoming dependent, while Google can exploit its ownership by adding features. Now it can even offer the ultimate Android, in the form of its Pixel handset. In other words, the company has set out to fully embrace the idea of constantly creating better products, not just better services. Google stock on October 19 reached a new all-time high of $821.00. Imagine how far it could go around the holidays, when no doubt its Pixel devices will be selling even better than the company had predicted, thanks also—no doubt—to the absence of a viable competitor from Samsung.
GOOG Stock is Already at Record High
Indeed, the new record price for GOOG stock was the result of favorable reviews rather than sales. The facts that emerge from the reviews are bullish. The Pixel phones have proven their market worthiness. Now they will go for the big popularity contest at an electronics store near you. But Google’s first venture with smartphones under the Nexus brand hasn’t been spectacular. Why should this be different?
Again, it goes back to the many disappointed users of the Galaxy Note 7. The clear void has left the field wide open for a new player, including one bearing the actual Google brand, not a facsimile thereof: “Nexus.” Google was shy the first time. It would have enjoyed more success naming Nexus handsets as “Google” from the start. After all, the only person who doesn’t know Google now is that last Japanese soldier from World War II still defending his lonely island in the Pacific. And he doesn’t count, because he can’t trade.