Google's Next Move: Consumer Hardware?

After so many years of dealing almost exclusively in Internet-based services like search, sources say Google Inc. appears to be entering a new phase focused more on consumer electronics.

The Internet giant, based in Mountain View, Calif., is considering selling its own version of a wireless networking device for homes, according to two sources, and is reportedly in talks with giant retailer Wal-Mart Inc. to sell an inexpensive Google-branded personal computer.

Google already makes Google-branded hardware, mainly consisting of a line of search engines meant for businesses. Google-branded consumer devices, outside of promotional items like Lava lamps, are hard to find.

A quick trip through the Internet found just one Google-branded consumer electronic device: a PC memory stick with the Google logo, for sale in the United Kingdom.

But there's more to come, according to the rumor mill.

"Over time, Google could become more of a hardware company than anything else," Bear, Stearns & Co. Inc. analysts said in a note to clients in mid-December.

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Google watchers said they expect more evidence later this week of this supposed new push off the personal computer and into living rooms. Google is attending the gigantic International Consumer Electronics Show in Las Vegas, which is one of the largest consumer electronics shows anywhere.

Read more here about the upcoming International CES (Consumer Electronics Show) event.

Rumors abound as to what Google plans to do at CES, and what co-founder Larry Page will say during a keynote address scheduled for Friday.

One of the juicier possibilities, which some commentators say they've already confirmed, involves the introduction of a mesh networking device some have dubbed the "Google cube."

It's a version of a home networking device that wirelessly shuttles digital videos, pictures, music and other kinds of content from personal computers to various home electronics.

Bear Stearns said it thinks the cube's price tag may be heavily subsidized by Google, so as to bring it low enough to be widely affordable.

Read more here about possible uses for Google cubes.

Google, a PC maker? According to the Los Angeles Times, a report Google has partly denied, the company has been in talks with Wal-Mart and other major retailers about selling an inexpensive personal computer.

A Google spokesperson, reached Tuesday, denied that the company had plans to sell a Google-branded personal computer.

"We have many PC partners who serve their markets exceedingly well and we see no need to enter that market; we would rather partner with great companies," a Google spokesperson wrote in an e-mail.

But it's hard to square Google's denial with its participation, announced in October, along with chip maker Advanced Micro Devices Inc., Linux operating system specialist Red Hat Inc. and other tech luminaries, in the drive to create and sell a $100 PC to the developing world.

Production of the PC, which also features a manual crank for generating battery power, is due in late 2006. The companies participating say they intend to build 100 million to 200 million units by 2008.

A Google cell phone is also within the realm of possibility. Google was recently tapped to be the default search engine for a Web browser from Opera Software that's meant for use on cell phones and is due out this month.

Read more here about Google's new connection with Opera over mobile search.

It's a short hop from there to a "Google Phone" that comes fully loaded with cell phone versions of Google's services. If ESPN, the sports cable channel, can sell an ESPN phone, why not a Google phone?

Predominantly software-based companies that arguably approach Google's size have tried to make the leap to the hardware world, with mixed results.

One such is Internet company Yahoo Inc.; A cell phone that comes with many Yahoo features for the wireless device has failed to spark much interest.

But should the apparent new strategy prove successful, Google could become even more of a threat to Microsoft Corp. than it is already.

Save for creating its own operating system, Google has managed to all but match Microsoft's Internet offerings, feature for feature.

By moving into consumer electronics, Google would push beyond Microsoft in the hardware arena.

Microsoft has traditionally limited its own hardware devices to relatively few items, including its popular Xbox gaming system. It has done some experimental research in the mesh networking arena, but that has been the limit so far.

"At a minimum, [people] should take away from this that Google is not just a software/programming company any more," Bear Stearns recently advised its investor clientele.

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