Google is suffering an identity crisis between it’s software and hardware sides. Google has done a good job locking down it’s systems and software side of the business. Android is a successful mobile OS and Google cloud apps, like Gmail, enjoy widespread success. Even Chrome OS, after a shaky start, is finding some traction with the release of several successful Chromebook laptops.
On the hardware side, Google has moved in fits and starts. The initial Nexus phones Google produced were a direct result of third party Android phone vendors not producing phones good enough to stack up against the iPhone. Google needed to produce a reference phone to show third parties the kind of quality and workmanship it expected. It worked as Android phones rapidly improved. The general public could always buy these Nexus phones, but clearly Google also didn’t want to step on the toes of it’s third party developers. Later, the Nexus line expanded into 7 and 10 inch tablets.
Google has mostly stayed away from consumer hardware, opting for highly experimental gambits like self driving cars and Google Glass. That was until they bought Motorola. Google bought Motorola for it’s patents, but along with that came a well known consumer products business. All of a sudden, Google was in direct competition with it’s partners. Only one phone came out of the Google/Motorola combination, the venerable Moto X.
I think Google primarily sees itself as a software and services/platform company, but they keep dabbling with hardware. The latest move is to sell the consumer products part of Motorola (holding onto all the valuable patents) and acquiring Nest, a company that currently makes expensive consumer products for the home. I think Google sold Motorola because they really don’t want to compete with their partners so closely, but clearly Google want to do something with hardware. In Nest, they get a very talented design team of Apple veterans not tied to a particular product the way Motorola was primarily tied to phones. The future is in wearables and the “Internet of Things” and this is where Google will use Nest. Like the Nexus program, Google will produce hardware in these new emerging areas as much as reference designs as being a successful consumer products company. Google’s primary goal is to blaze a trail and inspire others. Google won’t and doesn’t care about making money on consumer hardware; they will make it where they always have, on the back end. Hardware is simply a trojan horse to back Google services and advertising up to.