File this one under a desperate move that wouldn’t move the needle. A Morgan Stanley analyst is urging Alphabet, Google's parent company, to spend upward of $3.3 billion to put a Google Home Mini in every abode.
The reason? To try to catch up with Amazon and Alexa, which is pulling away from Google and Google Assistant in terms of retail search queries and, by extension, purchases being made through voice commands.
Here’s the problem. Just giving away smart speakers doesn’t mean that they’ll be used, and Amazon’s lead isn’t just about hardware.
According to MarketWatch, analyst Brian Nowak says that the $3.3 billion would be a “small price to pay,” and that Alphabet would more than make up for the investment with the resultant increase in retail search.
But shoppers haven’t been conditioned to shop through Google as they have been with Amazon Prime. Amazon now has more than 100 million Prime customers who get access to free two-day shipping (or faster).
That same $119 annual fee for Amazon Prime provides all sorts of other perks as well, from free Prime video and music to Whole Foods discounts. Another key benefit? Exclusive access to deals.
In fact, you may have heard of Amazon’s juggernaut of a made-up holiday called Prime Day? The company has its own Black Friday, and it’s coming up soon.
Sure, Google has all sorts of competing services, including YouTube TV and YouTube Music. But Alphabet hasn’t tied anything together like Amazon Prime. And while shopping is a key part of the Google experience, Google is not a major retail force like Amazon is.
So will giving away smart speakers help a little? Sure, but to really beat Amazon at its own game, Google would need to change its business model and acquire a major retailer or become one. And I don’t see that happening anytime soon.
Alphabet has made some steps in this direction, recently forging an alliance with Chinese e-commerce firm JD.com while investing $550 million for a 1 percent stake. And last year, Google teamed up with Walmart to start offering the retailers products through its Google Express shopping service.
But it’s going to take more dramatic — and strategic — moves to make putting Google Home Minis in every home feel like a real step forward instead of an ill-informed lurch. There are better ways to spend that $3.3 billion — like maybe investing more money into making sure Google Home Mini and Chromecast don’t go down for nearly a day.