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Why Google Shouldn
Why Google Shouldn't Get Into Video Game Consoles

By Jennifer LeClaire
June 28, 2013 12:24PM

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"Even the phones and tablets Google makes are loss leaders," said game analyst Billy Pidgeon of rumors that Google is looking to get into making video game consoles based on Android. "There are manufacturers like Ouya and there will be other consoles and multimedia boxes. Hardware is a very risky play."
 



It seems there's no tech-oriented market stone Google is willing to leave unturned. The latest rumors around the technology giant suggest the company is venturing into the video game console industry.

According to The Wall Street Journal, Google is developing a video game console and a watch based on its Android operating system. The Journal cites "people familiar with the matter" in a story by Amir Efrait. Google could not immediately be reached for comment and declined to comment to the Journal.

With the runaway success of the Android operating system, it's no surprise that Google would work to leverage it on new devices. IDC reports Android was installed on 75 percent of smartphones and 57 percent of tablets shipped in the first quarter, clear market domination.

A Shrinking Market

The smart watch category is the subject of many rumors as the world waits for Apple to debut an iWatch, but the video game console market may be tougher to penetrate. That's because the video game console market is no longer growing at yesteryear's rapid clip.

According to NPD Group, U.S. retail sales of video game hardware, software and accessories dipped 25 percent to $495.2 million in the first quarter, thanks in part to consumers playing more games on mobile devices and holding back spending until the next generation of consoles hits the market.

Relevant to Google's rumored move into the hardware side of the video game equation, NPD reports hardware sales suffered more losses than the rest of the industry. Specifically, this sector took a 42 percent hit year over year. Software sales fell 17 percent.

Console Not Likely

To gain insight into how likely Google is to pursue a video game console, we caught up with Billy Pidgeon, an independent video game analyst. He told us he doesn't expect to see Google go down the video game console path because the company has historically shied away from a heavy emphasis on hardware.

"Even the phones and tablets Google makes are loss leaders. There are manufacturers like Ouya and there will be other consoles and multimedia boxes," Pidgeon said. "Hardware is a very risky play."

As he sees it, Google should get its Play and Games strategies further out on the Web before pursuing hardware, because software and services are the important factor, not consoles. Google could do that by ensuring its content is delivered to TVs and Internet-connected devices.

"The first priority should be to make sure as many devices as possible support Chrome and Android," he said. "Google is better for not having pursued a hardware-centric strategy. Hardware is generally becoming less relevant as we go forward."
 

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