Every company and industry competitor currently serving and targeting the digital home marketplace doesn’t know they are largely surrounded, but they are.
If one organizes and pieces together the many related things Google intimated at its I/O developer conference last month, especially about Google’s big advantage in conversational AI voice, with what we already know about what Google has already achieved and is doing, what kind of Google digital home strategy becomes clear?
The assembled pieces showcase a discernible big picture of an exceptionally comprehensive Google-Android strategy to try and monopolize the integrated connectivity of home automation (i.e. digital information, products and services) over time via: its strong advantage in conversational AI voice interface, Android dominance, and its proliferating OS tentacles -- very much like Google did with mobile search and search-related information, products, and services in increasingly dominating consumer digital services over the last decade.
Simply, after uniquely and successfully organizing around ~all the digital needs of ~all users over the last decade, apparently Google is uniquely trying to do the same for ~all the digital needs of ~all homes over the next decade. While some competitors may enjoy substantial scale of some kind in the home market, none is close to Google in terms of scale, scope and reach in the integrated connectivity of digital home services and automation.
Only Alphabet-Google’s strategy has the scope to serve and encircle the digital home market holistically from the outside in. Consequently, they alone are attacking the home market from every direction and they are ahead in ultimately seizing control of the most likely new home “demarcation point” of the future -- the conversational AI voice interface. (Note: Just like Microsoft totally missed the rapid shift to mobile, many pursuing the home automation market may be largely missing how fast Google-Android’s apparent monopolization strategy could tip this market to Google dominance long term.)
What do I mean with encircling the home from the outside in?
Google starts this effort from a prodigious position of market strength and advantage.
Google owns: a de facto monopoly encircling position in mobile search, search advertising, and the licensable Android OS (all with ~90% share in the U.S. and the EU); several proliferating billion-plus-user platforms in Maps, YouTube, Chrome, Gmail, Apps/Play, Mobile; and ~190 more products and services in the tying queue. (See here, here, here & here.)
Google’s also starts with the world’s existing most integrated connectivity and automation system for users in the world, its Androidopoly, which serves >1.5 billion monthly active users, is now the only viable licensable mobile operating system globally, and is uniquely licensed by a critical mass of 400 OEMs, >550 carriers, and ~4,000 distinct devices -- per Google.
And Google is not standing still. Its Android OS is also in the process of rapidly expanding its de facto OS scale, scope and reach by steadily integrating with Google’s sister operating systems: its billion-user Chrome browser/OS and fast-growing Chromebook/Chromecast OS offerings, and with Brillo, Google’s OS for low-power, memory-constrained Internet of Things devices, that uses WiFi and Bluetooth-Low-Energy. Simply, Google-Android’s proliferating family of compatible operating systems command much more scale, scope and reach in home integrated connectivity than conventional wisdom appreciates.
Further strengthening its long-term holistic advantage and strategy for the home, Google has an increasingly comprehensive suite of home devices and services that it can offer in an integrated manner inexpensively for the homeowner via subsidization through advertising.
Google starts with owning Nest, a leading device provider of thermostats, smoke and carbon-dioxide detectors, and DropCam home security systems and surveillance streaming cameras for the home market. For wireless connectivity and home networking, Google also offers OnHub WiFi wireless routers.
In addition, it offers the inexpensive Chromecast device, a digital media player that: streams video over WiFi or a local home network; and that can use the Chrome browser to connect to any desktop PC and Android smartphone/tablet.
On top of that existing suite of home products/services, at its I/O conference Google announced new home products/services coming this summer.
Google introduced “Home,” its new personal assistant device that is architected around Google’s low-cost Chromecast technology and OS that can eventually work with most any home digital device, and that can leverage Google’s new Allo personal assistant messaging capabilities and Google’s new Duo capability of one-to-one video calling -- both of which are organized around phone numbers. This suggests Google’s “Assistant” capabilities could be much more holistically-integrated with connectivity, communications and sharing capabilities than other personal assistants for the home.
(Yet another home device Google has engineered and demo-ed on Capitol Hill, but not yet deployed, is a cable set-top box, because Google awaits the FCC’s Google-backed, AllVid proposed rulemaking, which would force Pay TV providers to make all their video content and information available for free to Google and others. Apparently this new potential regulatorily-created set-top-box market would provide the most lucrative advertising and monetization opportunity to fund Google’s overall home automation dominance ambitions.)
So what about Google ultimately controlling the most likely new home “demarcation point” of the future?
Historically, the communications “demarcation point” in the home was the network interface device where the outside network owner’s facilities ended at the side of the home/building and a customer’s premises ownership began. However, the advent of home WiFi networking, which is getting more and greater-range WiFi bandwidth/spectrum, is a potential game-changer in creating an opening for voice-controlled home devices/services to potentially become the de facto new home “demarcation point.”
That’s why many players are circling this general home space: Amazon’s “Echo” device, Apple’s iPhone/Tablet “Siri,” Microsoft’s Windows OS “Cortana,” and now Google’s “Home” device that is supported by Google’s cloud “Assistant” service capabilities.
Mary Meeker’s much-followed, annual Internet trends presentation, just spotlighted how voice recognition is nearing “game changer” quality levels. It also explained why “voice… should be the most efficient form of computing,” in part because we can speak 3 times faster than we can type, its hands free, and it is more context driven.
To the extent that the real commercial battle for control of home automation pivots on the new potential disintermediation point of all disintermediation points, a conversational AI voice interface for all home digital services, Google appreciates it has a powerful advantage going forward in conversational AI voice, to bolster its overall strategy to ultimately command the new de facto demarcation point for integrating connectivity of the home.
Google CEO Sundar Pichai told the I/O developers conference last month that "Our ability to do conversational understanding is far ahead of what other assistants can do. We're an order of magnitude ahead of everyone else." CEO Pichai also revealed at I/O that 20% of searches on the Android app in the U.S. are now by voice.
Simply, Google’s powerful advantage in machine-learning-based, conversational AI voice interface stems from the fact that Google’s search and Android monopolies mean Google commands vastly more of all of the inputs necessary to learn and perfect a conversational AI voice interface. Those key inputs are: the most real voice searches, most information indexed, most voices recorded, most languages recorded, most user questions, asked and answered, most follow-up questions asked and answered, most long AI-based conversations conducted, most location-context questions asked and answered, most user commands practiced, most image or video requests fulfilled, by most users served, over most devices, in most places, in most languages – compared to any competitor.
Simply, natural language processing is machine learning driven. More experience = more data = better quality. As Google’s Chief Scientist Peter Norvig has explained "We don't have better algorithms than everyone else; we just have more data."
In sum, holistic integration of most home digitizable services is complex; and Google is alone in fully attempting it, and in being on path to eventually achieving it.
Currently, the whole home technology ecosystem of providers, products and services finds itself largely surrounded by Google-Android, which has a clear strategy, ambition and capabilities to eventually disintermediate competitors and monopolize much of the integrated connectivity of home automation that is currently done in silo services, by cross-leveraging its dominant: free OS Android software, free search, free services, free apps, and deeply-discounted home devices -- all subsidized by the world’s dominant advertising engine.
The big takeaway question here is will the strategy of free services/apps/software, network effects, and tying that Google-Android successfully employed to dominate the mobile market, also succeed in the home digital products and services market?
If Google-Android continues to face no material antitrust scrutiny in the U.S., and if the FCC’s Google-backed AllVid proceeding ultimately open-sources America’s $200b annual Pay-TV revenue stream for Google’s primary commercial benefit, then Google’s home automation monopolization strategy and unmatched network effects could ensure that Google dominates the home digital services market just like they have dominated consumer mobile digital services markets without antitrust scrutiny.
Forewarned is forearmed.
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Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an emergent enterprise risk consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google and also before the relevant House oversight subcommittee on Google’s privacy problems.
