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Why's Google Getting into Gaming?

  +Follow June 28, 2013 1:56PM
Tickers Mentioned:

Google (GOOG) might soon be adding another product to their impressive arsenal: gaming consoles.

While Google works on the cutting edge of tech, developing driverless cars and wearable tech like Google Glass, according to “people familiar with the matter” they are looking to revisit consoles, a relative dinosaur in tech. The new console will reportedly run on Android, Google’s mobile operating system.

Coupled with reports from the Wall Street Journal that Google is developing a smartwatch, it seems that the company is also trying to deliver another punch to beleaguered Apple (AAPL). But unlike wearable tech, the move into an established arena like gaming will be a tricky one. Microsoft’s new XBox and Sony’s Playstation are stalwarts in the gaming field. Android is a popular OS, but a Google console will really have to be special to set itself apart.

So what do we know about a possible Google gaming console? Well, it would have to set itself apart from the first Android gaming console. Ouya, an open-platform gaming console, just went on sale for $99, and has already sold out on Amazon. Ouya is set to succeed on its price point – as USA Today’s review points out, “what will determine Ouya’s success is their content.”

While the future of Ouya is uncertain, user enthusiasm is high. They raised $3.7 million but then struggled to meet the promises of delivering early release of consoles to backers, and early reviews have been negative. This is indicative of a major advantage Google has with an Android gaming console: an established infrastructure, both for testing and delivering a product.

Google doesn’t have an established gaming pantheon like Microsoft' (MSFT) Xbox or Sony's (SNE) Playstation (or even Nintendo’s Wii.) The success of their gaming console will be its features. In this way, the development of their console might be another pre-emptive strike against Apple, who has long been suspected to be getting into gaming consoles.

A gaming console from Google isn’t going to be a major disruptive force. But what it will do is cut into the type of console Apple would theoretically produce. That is, one geared less towards hardcore gamers and more towards casual users who don’t wait in line for new Xbox releases. They look for the cheapest, most reliable option for watching movies, playing music, streaming Netflix (oh, and playing the occasional game) all on one gaming console.

So why's Google getting into gaming? Because everyone else is. There's a market for gaming systems, both for hardcore gamers but also consumers who just want to consolidate their home enterteainment. Every other major tech company is in on gaming, and doing well. But now they have to deal with Google.

Google is up .34 percent to $880.08 a share.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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  +Follow June 28, 2013 1:56PM



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