Google Glass

Google Glasses: 'They Make Me Feel Powerful'

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Harvard Business School has a case study on Google GOOGL +0.02% Glass to frame the analysis of the new smart wearable product and let students debate marketing strategies that could maximize its potential. Walter Frick at the Harvard Business Review outlines some of the marketing issues Google faces with Glass.

In the first class of the semester on Google Glass, the professor asks which of the following customer segments could be the early adopter category.

1.       Enterprises, followed by gradual consumer uptake

2.      Geeks and “digerati”

3.      General consumers

Most students voted for #1, enterprise customers, and assume Google will start with businesses then slowly shift emphasis to consumers.

I respectfully disagree and believe choice #2, Geeks, is a more likely scenario. Google could target programmers and gamers with incentives to develop apps for the new wearable category. Programmers have a tendency to adopt new technologies quickly and as a note are not price sensitive with their new gadgets, an extra bonus for Google.

Why Geeks Will Lead in Glass Adoption

Geeks have experience in developing consumer apps and understand the range of potential business models. The programmers have the basics down on operating systems, databases and APIs so their learning curve could be short for developing businesses that use Glasses. Geeks are adept at consumer apps, where I believe the market will materialize first. Let’s look at other hints of big demand by Geeks.

So far, Geeks are the biggest consumers of Glass. Hundreds of Glass-wearing nerds cruised the floor at Tech Crunch Disrupt in New York City in early May, after buying aggressively as soon as  Glass was released. Despite looking like Vulcans, they wore the Glasses like a badge of honor.

Enterprises may not be ready to deploy Google Glasses on corporate networks as their infrastructure may not be able to handle these smart devices that are data-hogs. Glasses will generate high volumes and varieties of formats moving at high velocity. Legacy data systems can’t scale, can’t handle every APIs, and can’t deal with massive real-time processing. So, enterprises may not be able to manage the processing needs of Google Glasses.

Enterprises generally don’t develop proprietary apps for smart devices, but rather wait until the technology is proven. Operating managers would have a hard time getting budgets approved for development plans with fuzzy objectives. Businesses want a sure bet, or at least controlled risk. Finding software developers that are a cultural fit is time-consuming and expensive. MaybeFacebook or Tesla may have extra developers around, but most corporations don’t.

Will Google Repeat the Android Strategy with Glass?

Android’s open-source platform was a successful business model for Google. For smartphones, Google undefinedled with consumers, then invested in the platform to attract enterprises.

Google’s smartphone strategy may be suited for Glasses too. Google may start with consumers then expand to enterprises. It is critical to have products for both consumers and enterprises. Blackberry is a cautionary tale of what could go wrong with a focus exclusively on enterprises. Blackberry ran into problems when Apple disrupted the high end of the smartphone market, sending Blackberry’s enterprise business into a tailspin. Apple made a quantum leap in technology when it essentially crammed the Mac computer into the iPhone. With the high end of the market taken by the iPhone, Blackberry tried the low end, the consumer market. Blackberry found that intense price competition from Asian suppliers had flattened margins. Blackberry was squeezed out of the high end and the low end of the market, and it never recovered.

One reason the consumer market has been a sweet spot for mobile players is the public cloud is a great enabler. It’s a high functioning utility any device can plug into. The cloud serves billions of users and takes advantage of scale. It has more capabilities than any enterprise network. It can handle massive amounts of processing and storage. Mobile player can leverage the capabilities of the cloud to bring services to the consumers. But enterprises work within legacy systems with many limitations.

What Users Say about Glass

So far, Google has been mum about its strategy for Glass. Despite the lofty introductory price of $1500, sales have been strong. Even out of the gate, demand is encouraging. Glass shipments could be “in the thousands,” according to estimates by KHX Investment who surveyed users at the Tech Crunch in NYC.

In the survey, users said Glass was disorienting at first, but they adapted quickly. It was like wearing a smartphone on your head. Programmers felt “powerful” when they had them on. Some expect a broad selection of apps over the next few years.

Glass users liked the videocam feature, especially recording their own presentations. They liked the hands-free and voice-activated searches. And they liked having the dashboard for organization. They were less interested in receiving calls and email, which interrupted the videocam. They didn’t use the calendar and clock.

How Big Is The Glass Market in Five Years?

How big is the market for Glass? KHX believes Glass shipments could reach 250 million units in five years (2019), assuming the wearable follows the same growth trajectory as smartphones. That’s a baseline assumption.

There’s a case to be made for an optimistic and pessimistic view too. Tablet sales reached 400 million units after five years. That could represent the high end of the range for Glass. And, E-Readers and Notebooks only reached 40 million units after five years, which could be the low end of the range. But, any way you look it at, Glass sales could be tens or hundreds of millions of units. Glass could be a major source of revenues and profits.

Based on the Android strategy, Google seems likely to start with consumers, then make additional investments in software and hardware to go after the enterprise market. The strategy was a winner before.