Simon’s Blog

Over the last few days of the holiday, I’m sure everyone has seen the rumours that Google was to start selling PCs at Wal-Mart. Both Google and Wal-Mart have now denied this. Good thing too. I think Google would be crazy to get into the business of manufacturing low-end PCs. Why crazy? Because selling low-end PCs is a horrible, low-margin business; quite unlike the great, high-margin business Google currently enjoys.

However, Google is a strong brand. And they could potentially monetize this in the PC business without manufacturing products themselves, albeit at the price of weakening their brand. One way such a deal could be structured would be for Google to lend their brand name to a PC product. So, Dell, or HP, or someone else could announce a deal with Google for the “Google PC” - which could be bundled with some Google software, and maybe even some hardware buttons to interact with said software. In return for use of the Google name (the value of the bundled software would be minimal in such a deal - it would just be there for optics), Google would receive a royalty on net sales.

From Google’s point of view, this could be valuable. If the product was great and sold in volume, Google could not help but make money: a royalty on sales remains the same, even if the product as a whole makes a loss. The risks in such a deal, then, would not be financial. Rather, they would be reputational - if the product was weak. Also, it would weaken the Google brand, even if the product was a success.

That Google could enter the PC business, then, is not in doubt. I still question, however, why they would want to. Google’s mission is “to organise the world’s information”. I’m not sure they have to sell PCs to do that…