It has been interesting to watch Google (GOOG) co-founder Sergey Brin passionately demo his Google Glass project. He is passionate about this project because he thinks that it will revolutionize the way consumers access and manipulate information.
I have never been more confident about making a prediction like this before:
He is terribly wrong.
To take a step back, what is Google Glass? It's basically a computer that is integrated into a pair of glasses and interacts with the user via visual and voice prompts.
It shows visual information in the top left of the user's field of vision, is able to record what the user is seeing and then share that data wirelessly via social media outlets.
Currently, the glasses look very futuristic and attractive to the geeky few but as the description above concludes, Google may find a sunglass retailer partner to make them look better soon.
The aesthetics aren't the main problem. This experiment will not work because it ignores a few core aspects of the social human experience.
In society, people rarely make the choice to use glasses unless there is some pressing need. We use sunglasses briefly when we are in the sun (or unless we are celebrities - a small minority of us) but when the intense sunlight is gone, we put them away.
Glasses in society are mostly used by people who need them. The popularity of Lasik eye surgery and contact lenses also indicate that people would (if given the choice), prefer to see without any structural aid.
3D televisions were meant to be the next big thing a couple of years ago and that trend pretty much fizzled out. Why? Well in part because consumers were not thrilled about having to wear glasses for an extended amount of time to view the televisions.
In addition, human beings are very picky about putting technology on their faces.
In the past 20 years, I can think of only one computing device that consumers have adopted on their faces - the Bluetooth earpiece.
In that very rare case, it's worn on the ear (the very side of the face) and the devices have become smaller and less distinct every year - an indication that consumers don't want to purchase a noticeable and prominent device.
Finally, in my opinion, Glass will fail simply because it totally makes the wrong assumptions about how people want to consume information.
The popularity of mobile devices seems to indicate that people want to have access to information on the go but they don't want that access in a persistent manner. In other words, people also like to feel like they have the choice to put away (in a pocket, a bag or a briefcase etc) the information easily.
While you can also do that with a pair of glasses, it's totally counter intuitive to the way people wear glasses today.
While I think that Google should be applauded for pushing the boundaries of technology, I do think that investors should be wary of how aggressive the push will be to get this device into the mainstream.
If pushed hard, at best this may be a niche device that some of the geeky faithful will adopt. At that point though, a lot of questions have to be asked about the opportunity cost of this effort.
Google's stock is currently hovering at around $835 and it would be silly to think that Google Glass by itself could help destabilize the stock in any way.
Tim Travis in a great article here described Google's strength well:
While it is easy to get lost in all of Google's innovations, it is essential to understand that at its core, Google is the dominant advertising medium. In 2012, $43.586 billion of Google's $46.039 billion of ex-Motorola revenues came from advertising. Total advertising revenues have grown in excess of 20%, in each of the last 3 years. Advertising on Google's websites constituted 68% of Google revenues, while Google's network members' websites represented 27%. Both grew by about 20% in 2012 and have the potential to grow by a similar rate in 2013. Google is dominant in both Internet search advertising and mobile, and has the best display ad business in the world.
I would add a very important caveat - for now.
I personally think that Google's stock is hyper inflated and because it has one central source of revenue (advertising), any sudden adverse changes to that source leave the company very vulnerable.
Google should be hyper focused on finding new sources of revenue that will rival if not surpass advertising. Quite frankly, glasses ain't it.
As an investor, I think you should buy or sell Google stock based on the company's ability to either substantially expand ad revenue or find a complementary and impressive source of revenue.
Google Glass doesn't fall into either of those categories so you should discount it when making your Google related investment decisions.