A recent article published in the Wall Street Journal reports that Google is making firm plans to enter the home entertainment industry. According to this WSJ article the rumored home-entertainment system scheduled for market introduction later this year would stream music wirelessly throughout the home and would be marketed under the company’s own Google brand. This new development is being headlined as Google’s first entry into to consumer hardware electronics business, possibly to compete with Apple.
The reality however, is that Google has had a previous foray, albeit indirectly, with the former introduction of its Nexus One smartphone in 2010. Google’s idea was to offer its own Android powered in an unlocked state, which would allow consumers to be able to acquire the phone online, regardless of current mobile carrier. The strategy was controversial in that it circumvented all existing fulfillment distribution channels. From the get go, Google experienced multiple issues related to consumer difficulties in purchasing and activating phones. Questions were also raised on the deployment of a worldwide order channel and on consumer’s ability to easily obtain service, while contract manufacturer HTC was placed in a rather challenging position to be able to support all of these needs from Google. After a short existence, the phone had to be eventually withdrawn from the direct channel, in favor of distribution through select carrier distribution channels.
If this speculated electronics hardware product does come, the question is what has Google learned relative to market introduction and corresponding supply chain fulfillment management needs? The answer may lie in Google’s pending acquisition of Motorola Mobility. ZD Net blogger Larry Dignan believes that we should not be too quick to count out Google. While Google doesn’t know hardware, Motorola does, and already has a sizable installed base of cable set top boxes sitting in consumer living rooms. Motorola also knows high volume, consumer electronics supply chain requirements and has been able to transform its supply chain capabilities through rather difficult times.
Supply Chain Matters therefore offers its humble advice to Google. You may well have the coolest, wireless home entertainment system, but supply chain management is not your core competency. You are about to inherit an equipment supplier who understands new product introduction, channel and supply chain fulfillment needs, with a track record of transformation. Let the acquiree share with you that knowledge, competency and capability.
We submit that the goal for Google is to establish a presence and a quality reputation in the highly competitive hardware industry. While some may also include the goal as breaking down traditional barriers of distribution and fulfillment, perhaps that should be deferred to organizations that have already completed this successfully. Apple and others are formidable competitors with strong capabilities, and a new entrant, even Google, has to have savvy and proven experience in the tenets of supply chain management.
Bob Ferrari
