When Google’s CEO Sundar Pichai takes the stage tomorrow, he needs to deliver on the promises made a year ago for Google's mixed reality strategy.
Google has struggled with making hardware products, and now it’s got a massive challenge as its competitors, including Samsung, Facebook, Apple, Sony, HTC and others are pouring huge financial and human resources into both augmented reality and virtual reality products and applications.
Google’s Pichai has said he sees hardware as the company’s “next big bet.” So when he delivers his keynote at Google I/O Wednesday at the Shoreline Amphitheater in Mountain View, California, expectations are high that he will deliver on Google’s promise to be a player in AR and VR.
Google CEO Sundar Pichai speaks during a news conference on Google's collaboration with small scale local businesses in New Delhi, Jan. 27, 2017. (AP Photo/Tsering Topgyal, File)
Mark Berniker does not own shares of Google.
Google’s Daydream virtual reality headsets have been out since last year, and far trail Samsung's sales. Superdata Research reports Google’s Daydream headsets have sold 170,000. Meanwhile, Samsung’s Gear VR headset sold 782,000 units just in the first quarter of 2017, and now more than 7 million units of the Gear VR headset worldwide have been sold worldwide.
Google’s slow ramp into VR comes as Facebook Oculus, Samsung’s Gear, HTC’s Vive and Sony’s PlayStation VR platforms are advancing quickly. The perception from several sources is that Google's VR strategy needs to accelerate, if it is to keep up, or potentially surpass its rivals.
IHS Markit forecasts that Samsung will emerge as the overall mobile VR leader with the company approaching 10 million units total by the end of 2017. IHS Markit estimates Samsung will sell 4.12 million VR headsets this year, down close to 10% from the 4.56 million in 2016.
IHS Markit estimates Daydream View sales in 2016 were 120,000, but does have an optimistic sales forecast of 2.23 million in 2017, which would still be less than half as many units as the market researcher expects Samsung will sell this year.
Google has already said they want to be a player in VR hardware, but there remain serious questions how deeply Google is going to invest, market, distribute and sell hardware and applications that will resonate in the market.
One option for Pichai and his team are to aggressively expand through merger and acquisition activity. Google recently purchased Owlchemy Labs, an Austin-based VR gaming production studio, which earned $3 million in revenue for its “Job Simulator” title in the Sony PlayStation VR Store.
It’s entirely possible Pichai will target other specific and successful VR studios. The Owlchemy Labs purchase reveals both a priority area for Google’s VR strategy, and a potential vulnerability in the area of VR content creation.
Google’s challenge in both VR and AR markets is not only hardware, but also how does precisely become the primary destination for consumers easily engage with VR content.
There are expectations that Google will announce plans for a YouTube VR channel, which could be an important move towards marrying its hardware and content intentions.
While Google’s CEO Pichai is now raking in over $200 million in salary, he will likely be criticized if he doesn’t follow up on the promises made a year ago at Google I/O.
Pichai has two direct reports in the areas of virtual reality and augmented reality. Clay Bavor is in charge of Google’s Daydream product, and Johnny Lee is leading Project Tango, Google’s augmented reality project. There are questions whether Pichai will be adding people to his VR and AR teams, or if he will announce the poaching of any top executives that could strengthen his ability to deliver on future promises.
Google’s bread and butter is still search and advertising, but it sees itself having a big role in everything from artificial intelligence and self-driving cars to the huge market anticipation surrounding virtual reality (VR) and augmented reality. The problem with making promises public about the future is that if you don’t deliver, you leave yourself exposed.
Google watchers will look for Pichai, Bavor and Lee to deliver specific products, services, deals and new, and potentially exciting, promises for the future.
As Google shares trade near a 52-week high, the question remains what could the cost be to worldwide Google investors, if Pichai doesn’t deliver on his virtual reality and augmented reality strategies.
San Francisco-based Mark Berniker is a freelance journalist, producer and consultant and co-founder of Bootstrap Media, LLC, a documentary video production and media consulting company.