Google revealed several new projects and features during the keynote speech for its annual I/O conference this week, and there is a broad range of reactions to the new offerings. Some, like UBS analysts, say the new products demonstrate how Google is continuing to innovate, while others, like Macquarie analysts, note that there really weren’t any surprises.
Google continuing to innovate
UBS analyst Eric Sheridan and his team said they were “most impressed” with Google’s machine learning and “next-gen computing platforms. They also think Google is still the internet sector’s “innovation leader and that this year’s I/O keynote speech further convinced them of this.
One of the main focuses of the speech was Android M, and the UBS team does point out that the new version of the operating system is a mixture of Google playing catchup and new innovations. Of course Android Pay is clearly the search giant’s attempt to catch up to Apple Pay.
However, the UBS analysts liked Google’s “machine-learning technology,” like Google Now on Tap, which should enable the digital assistant to better anticipate a user’s needs. They also think the new photos app, which brings unlimited storage, is a big bonus for Android M. They believe machine-learning is Google’s way of setting Android apart from iOS.
Virtual reality and the Internet of Things are two other areas in which technology companies are racing against each other. Google revealed a new version of its Cardboard virtual reality headset and Jump, a platform for creating virtual reality video.
The search giant also showed off a new Internet of Things “stack” made up of the Brillo operating system and Weave, which is for communications among connected devices in the home. The UBS team believes, “Google’s experience in nurturing the Android ecosystem will serve it well in what will likely be an even more fragmented IoT ecosystem.”
Piper Jaffray analyst Gene Munster and his team were also very positive on Google’s speech. They suggest that while this year’s announcements were small, they will likely be part of a “long stream” of announcements regarding augmented and virtual reality, which they expect to stretch out over a period of 10 years.
Not as impressed with Google’s new offerings
Toward the middle of the spectrum, we have firms like Bank of America Merrill Lynch. Analysts Justin Post and Joyce Tran noted that the event “wasn’t splashy” and that management did not reveal a product that will act as a near-term catalyst. However, they’re still impressed with Google’s tech platform and IoT plans, which they believe will help Android retain its leadership position.
Macquarie analyst Ben Schacter and his team noted that Google had no surprises for us at I/O this year. While they remain positive on Google, particularly in the area of virtual reality, they point out that I/O is about “the nuts and bolts of the platforms that enable monetization” rather than business plans regarding the process of monetization. They expect virtual reality to be the next major platform after Google and will be keeping an eye on the company’s offerings in this area.
Worries about Google
Evercore ISI analysts Bill Whyman and Mike Swierczek were also impressed with Google’s new offerings. However, they also acknowledged some concerns about the search giant. These concerns stem from the structural complexity of the company. Growth investors aren’t keen on Google because the company isn’t growing enough to interest them. On the other hand, value investors aren’t interested because Google stock is far from cheap.
Many also remain concerned about capital allocation as Google continues to spend the cash it accumulates quite rapidly.
Some were all-out disappointed in Google I/O this year
Arguably the most negative on Google’s I/O speech is Forbes contributor Janakiram MSV. In fact, he said he was “confused and completely disappointed” with it.
While analysts from most investment firms primarily focused on the announcements about virtual reality initiatives, MSV, a developer as well as an analyst, noted that most of the news was related to Android M. He said Google was “only interested in showcasing Android,” and that’s what he doesn’t understand. He points out that while Android is important, but he thinks Google did a disservice both to itself and the tech community by focusing so much on the mobile operating system.
He wanted to hear more about the company’s Go language, which didn’t even get a mention during the keynote speech. The other topic he wanted to hear about was Google Compute Engine, which barely got a mention.
The analyst also found the speech lacking in details about Google’s IoT initiatives. Again, this is one area where analysts from other firms apparently picked up more about these initiatives than MSV did. His unique perspective as a developer in addition to being an analyst gave him different insights. For example, Google didn’t say if Brillo would run on both x86 and ARM chip architecture. This would certainly be a key piece of information that should be communicated to developers.
Microsoft stole Google’s thunder
He also had some interesting perspectives on Microsoft’s Build conference, saying he thinks Microsoft did a better job than Google in addressing developers this year. He thinks Microsoft “stole the thunder with an overwhelming number of announcements.” Further, he said the software giant paid close attention to detail, which Google obviously didn’t.
He points out that Google isn’t inferior to Microsoft, however, he felt like the Build conference was much more informative than I/O this year.
