In Sectors of Corporate Computing, Digital Assistants, Hardware, New Rivals Warned by Google

Netflix, Hulu, Apple and Amazon have been highlighted as being among competitors for Google in the annual report of Alphabet, Google’s parent company.

The company’s broad expansion beyond its original Google search business was highlighted as Alphabet Inc. warned investors about a slew of new competitors.

According to its latest annual report filed Friday with the U.S. Securities and Exchange Commission, while highlighting the risks that were posed from new businesses such as consumer hardware manufacturing, Alphabet named rivals including Apple Inc., Netflix Inc. and Hulu.

Gleaned from a comparison between Alphabet’s latest annual report and the filing from a year earlier, here are the top new competitive disclosures.

— “Providers of digital video services, such as Facebook, Netflix, Amazon, and Hulu.” offering that compete more directly with the latter three companies, Google’s YouTube has new paid subscription versions of its online video. On an earnings call last week, executives were cautiously optimistic about this. “[It] takes a while to build a subscription business here,” Chief Financial Officer Ruth Porat said.

— “Digital assistant providers, such as Apple, Amazon, Facebook, and Microsoft.” Google hopes to embed in as many devices as possible the Google Assistant, a voice-based information service which was launched by the company last year. Apple’s Siri, Amazon’s Alexa and Microsoft’s Cortana are assumed to be the main competitors of this service. A similar service is provided in its Messenger app by Facebook.

— “Providers of enterprise cloud services, including Amazon and Microsoft.” Diane Greene is finally turning into a serious service for larger corporate customers Google’s cloud computing business and this statement refers to that business. While the focus on enterprise is new, Alphabet mentioned the cloud in previous annual reports.

— “Companies that design, manufacture, and market consumer electronics products.” Including the Pixel phone and Home speaker, this statement likely refers to Google’s new suite of gadgets. Including Android device makers like Samsung Electronics Co., the phone makes it a rival to Apple.

New manufacturing and supply-chain risks that are related to its in-house gadget push were highlighted in Alphabet’s latest annual report while considering the issues of hardware. “We may enter into long term contracts that commit us to significant terms and conditions of supply. We may be liable for material and product that is not consumed due to market acceptance, technological change, obsolescences, quality, product recalls, and warranty issues,” the company wrote.

The potential costs that are associated with the marketing these new devices to potential buyers have also been disclosed by Alphabet. The official filing said that primarily driven by a $679 million jump in advertising and promotional costs primarily for Google’s hardware products, the resultant total sales and marketing expenses increased by more than $1.4 billion from 2015 to 2016.

(Adapted from Bloomberg)


Categories: Economy & Finance, Strategy, Uncategorized

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