While Google's parent company Alphabet is still undeniably an advertising company, Google's hardware business is finally shaping up, according to RBC.
RBC said Google's recent hardware successes, including the growing popularity of smart speakers and rave re RBC projects that in 2018, the hardware segment will generate a combined $ 8.8 billion (or 6 percent of gross revenue) and a profit of $ 3 billion (or 4 percent or gross profit). By 2021, it says, that will rise to $ 19.6 billion (or 8 percent of gross revenue) and a profit of $ 6.1 billion (5 percent of profits).
RBC also estimates that about 43 million Google home devices are now installed in the US and 9 million internationally.
While Google has not previously had breakout hardware success (and in contrast, has had some dazzling failures, including its glass facial computer), the category is increasingly becoming a fundamental part of its future, RBC says
"Hardware remains a small, but important part of Google, given its potential as a key growth avenue and strategic hedge for the company," Mahaney said.
While Mahaney sees revenue and profits growing, Google's real value hardware is dat het een platform biedt voor het ontwikkelen en implementeren van zijn artificial intelligence chops en geeft het meer manieren om advertenties te bedienen. Morgan Stanley analysts have actually recommended that Google should give its Home Mini devices away for free to defend its retail ads turf.
Here's how RBC predicts the revenue breakdown between Google's device lines. Unsurprisingly, the Home smart speakers are predicted to be in the most revenue: