- Google showcased a revamped OS for smartphone, referred to as L. The new operating system builds upon existing important features, making for a more competitive ecosystem.
- Google showcased Android Wear, which is contextual and notification driven. It is what a wearable PC is supposed to be: powerful, functional, and convenient.
- Under the leadership of Sundar Pichai, the Android segment has been able to out-perform, and out-grow other segments. Google has the right leadership in place to continue to strategically execute on product development.
- Overall, Google I/O can be seen as a positive catalyst to Google’s stock price.
Google (NASDAQ:GOOG) kicked off the I/O Conference with a mixed response from attendees. However, the stock price responded favorably, as it appreciated by 2.34% during the Wednesday trading session.
The Google I/O conference is the equivalent of Apple’s Worldwide Developer conference, and during the conference Google got a lot of things right.
Intuitive, smoother and secure, Android L can drive market share higher
L is what’s alluded to as Google’s next generation operating system for android. However, Google didn’t reveal the full name of the operating system.
Google executes on these three core areas in its latest version of Android:
Google boosted functionality by changing the user interface to be a little more intuitive. This involved the adjustment of the UI by making it easier to access notification before logging into the device, and better AI technologies via Google Voice. Google Voice can technically access other Google applications, and offer intuitive search suggestions.
In terms of performance, the Google Android team made the operating system smoother, by making the response time quicker. Furthermore, battery performance has been improved by making the operating system more contextual, resulting in battery saving features (up to 90 minutes of mobile usage has been added).
Furthermore, Google worked on the graphics of Android L. To improve upon graphics, Google created an Android extension pack. Android worked closely with Nvidia, Qualcomm, and Marvel Technologies to create the extension pack, which improves tessellations, textures, and other graphical details. Google mentions that high-end smartphones can play graphics that are on the level of PC. This is very important when it comes to tablets, as people in the emerging markets; treat a tablet like an entry level PC.
The company builds upon features, by ensuring that Android is more secure, by scanning every file that gets downloaded (this is an optional feature). Furthermore, Google also mentions that it releases regular updates to keep the Android store secure.
With better security, mobile users can make transactions via PayPal; make trades via their brokerage accounts, and access bank account information. A lot of sensitive financial data is accessed via smartphones, and by reducing the encounter rate of malware, Google is definitely on the right track.
Google announces new product categories
Google has designed a new operating system, which is referred to as Android Wear. Only today, we were able to see a full product demonstration, and tomorrow, Google plans to release a SDK (software developer kit) for the watch.
The company announced at the very end of the event that the LG G watch is available for sale on the Google Play Store. The specification are inclusive of a 1.2 GHz Snapdragon 400 CPU, 512 MB RAM, 4GB of memory, 400 mAh battery, and 1.65” 280x280 display. The device doesn’t come with a heart rate monitor, which doesn’t make the device very fitness oriented.
However, the device does carry the mobile experience over to the wrist quite successfully. Android Wear has a unique UI, in which viewing notification data, messages is extremely convenient. Furthermore, the device has Google Voice built-in, which allows to build upon the user experience incrementally, by allowing you to access pertinent information via search queries, activate navigation, respond back with voice-to-transcription text messages, and etc.
Currently, the LG G watch is priced at $229. The good news is that the wearables category has really high profit margins. It’s estimated that the iWatch will have a bill of materials of around $77. Therefore, if the LG G watch is being sold at $229 it’s fairly reasonable to assume that the device will carry a gross profit of $152.
The smartwatch market is still in its infancy, and there’s plenty more that Google needs to do, to make the device a very competitive one. But the level of interest by software developers has been huge, as the Android division seems to be executing on all four cylinders under the leadership of Sundar Pichai.
Bloomberg BusinessWeek gives a more thorough description of Sundar’s story, but here’s a short excerpt:
Ten years ago, the Indian-born Pichai, 42, was a product manager at Google, and his domain consisted of the search bar in the upper right corner of Web browsers. He then persuaded his bosses to wade into the browser wars with Chrome, which in time became the most popular browser on the Internet and led to the Chrome operating system that runs on a line of cheap laptops called Chromebooks. Pichai took over Gmail and Google Docs in 2011. In 2013, CEO Larry Page put him in charge of Android, making him one of the most powerful technology executives in the world.
From what I understand, Sundar Pichai is a very competent executive who can identify unique business opportunities, and quickly execute. Also, he plays the role of diplomat very effectively, which allows him to defuse situations with various OEM partners. As a result of his leadership, Android wows people at the I/O as the small yet effective Android developer team has revamped the OS to be just as competitive as iOS.
Google I/O clearly establishes Google’s dominance in mobile, in terms of market share. Google continues to identify ways to appeal to both the developed and emerging markets. The company continues to build upon an experience that nears the fluidness of iOS, but addresses business challenges in markets where the average disposable income limits a household to $100 to $200 smartphone devices.
The Apple iWatch will have to be a total show-stopper, because it’s hard to top the practical ingenuity, and product execution that was demonstrated by Android Wear over the course of the Google I/O conference.
Google’s ecosystem is starting to strengthen. It’s possible to imagine a world in which a consumer will buy Android Wear/Google Glass, Android smartphone, Android tablet, and Google Chrome Books.
While it’s hard to fully quantify any aspect of the I/O Conference, investors should interpret the recent conference as a positive catalyst to Google’s valuations which can drive Google stock price higher. Amigobulls rates Google stock 3.6/5. Read the company analysis of Google.
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