At Google’s Pixel 3 event, it’s all about the data

The search giant wants to sell you new phones and smart speakers. But your personal info is what it's really after.

Richard Nieva Former senior reporter
Richard Nieva was a senior reporter for CNET News, focusing on Google and Yahoo. He previously worked for PandoDaily and Fortune Magazine, and his writing has appeared in The New York Times, on CNNMoney.com and on CJR.org.
Richard Nieva
5 min read

Rick Osterloh, Google's hardware chief, is expected to announce new devices this week.

James Martin/CNET

For the last three years, Google has been working to pull off a daunting feat: elbow its way into today's crowded consumer tech device market and take customers away from Apple , Samsung and Amazon .

Though it's best known for world-class software including its iconic search engine, Google Maps, Gmail and YouTube, Google has been on a mission to make a name for itself in hardware. It now has a respectable spate of gadgets , including premium phones marketed under the Pixel brand, a virtual reality headset, a Wi-Fi router and three models of smart speakers. And that doesn't even include the connected thermostats and smoke detectors it sells under its Nest brand.

So it's no big surprise that Google on Tuesday is expected to unveil the next generation of its "Made by Google" line of devices. The rumors call for new Pixel 3 and Pixel 3 XL smartphones to compete against recent updates of Apple's iPhone and Samsung's Galaxy Note phones. A revised version of its Google Home speaker, reportedly called the Home Hub, adds a screen.

But despite all the new hardware, Google, which turned 20 years old last month, is a search company above all else. Its raison d'être, its worldwide name recognition and its cash-minting business are rooted in being able to deliver search results to you. So for all the attention that'll be paid to the shiny screens and matte finishes unveiled at its event in New York, make no mistake: This is still all about Google's software services -- and how they can find out more information about you.

Google wants to sell you phones and smart speakers because it knows people aren't searching for things on Google.com from their desktop computers anymore. They're telling their Google Home devices to play hip-hop playlists, or using the cameras on their Pixel phones to figure out the species of a certain flower. The more Google knows about you and your interests, the more valuable its ads become to marketers, who pay the company to target potential buyers based on their likes, dislikes, age, interests and even location.

The company makes about 90 percent of its $100 billion in annual sales from advertising.

Watch this: Google knows where you are

And to make sure that personal data goes to Google -- and not to a rival like Amazon, which today has the biggest share of the smart speaker market with its Echo devices -- the company believes selling you phones and other hardware is the best way to keep using its services.

"It's a bet on the future," said Ross Rubin, founder of Reticle Research. "They are trying to build a portfolio of things to complement their software."

Not a hobby

Google has worked hard to toughen up its hardware chops. What started as a hobby with one-off projects here and there -- the short-lived Nexus Q streaming device or the disastrous Google Glass eyewear -- is now a legitimate hardware business.

In 2016, the company tapped Rick Osterloh, a former Motorola executive, to lead a dedicated team focused on creating consumer devices. That year, Google released the Pixel, its first branded phone and a premium alternative to iPhones and Samsung phones. Last year, Google paid $1 billion to bulk up its hardware engineering ranks through a deal with Chinese manufacturer HTC. The goal was to create a line of devices that would act as portals into Google's software offerings.

The secret weapon in all of this? The Google Assistant, a digital helper akin to Amazon's Alexa and Apple's Siri. The software is designed to use your voice to turn off the lights, lock your doors or read out the morning's headlines. Google wants to get the Assistant into as many devices as possible. And to show consumers what the software can do, Google decided it needed to build its own hardware to demonstrate those abilities.

Google Lens, a tool that lets people look up information on real-world objects by pointing their smartphone cameras at them, was first launched exclusively on the Pixel 2 . And the Assistant was initially released with Google Home and the company's Allo chat app (though Google has paused development on that service).

"They've used Pixel as something of a vessel in demonstrating their AI prowess," Rubin said. "These are definitely showcase pieces."

The strategy is paying off. In May, Google announced that 500 million devices have shipped globally with the Assistant on them, including speakers, phones and TVs . The Assistant now partners with 5,000 household connected devices, up from 1,500 in January.

Still, Google has a long way to go. When it comes to the battle for smart speakers, Amazon remains the champ. The e-commerce giant's Echo devices own 44 percent of the smart speaker market globally. Google Home holds 27 percent, according to a report by Strategy Analytics.

The downside of data

As Google tries to swallow up more of your personal information, Silicon Valley companies have been increasingly scrutinized for their data collection practices. Facebook brought the issue to the forefront in March after its Cambridge Analytica scandal, in which a UK-based digital consultancy harvested data on 87 million Facebook users without their permission.

Google has felt some of that blowback, too. In July, the company was criticized after reports that employees for a third-party email app could read our emails if we integrated those apps with our Gmail account. Google was hammered again a month later, when the Associated Press revealed the company was tracking users' locations even after they'd turned off their phones' location history setting.

Last month, Google Chief Privacy Officer Keith Enright — alongside representatives from other tech and telecom giants including Apple, Amazon and AT&T — testified before the Senate on privacy practices in Silicon Valley. Google CEO Sundar Pichai reportedly is expected to take the hot seat in another congressional hearing after the US midterm elections in November.

As Google products become more of a fixture in people's homes, the scrutiny is sure to intensify. The company should probably address those issues proactively at its hardware event, instead of waiting for issues to pop up and fester, said Bob O'Donnell, principal analyst at Technalysis Research.

"I fully expect they are going to need to start to make public statements about privacy," he said. "Google's been way behind the times. They really risk some trust issues down the road."

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First published Oct. 6 at 5 a.m. PT.
Update at Oct. 7 at 5 a.m. PT: Added more background information.

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