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Google-HTC deal about conversational AI, a better Android OS

Welcome to the dawn of conversational computing. A big part of this week's Google-HTC deal is about building smartphones -- and other AI-powered devices -- that talk to us. Also: Facebook turns over Russian-linked ads.

Another day, another Google aqui-hire. But what exactly is the search giant hiring for this time?

Google revealed this week that it's buying a big chunk of device manufacturer and longtime partner HTC for $1.1 billion in an effort to solidify and expand its hardware business, which includes phones, speakers and other devices.

If you take Google's gloss on the deal at face value, it seems that the company is trying to be more like Apple, complete with the promise of a "delightful" device experience.

"It's still early days for Google's hardware business," Google's Rick Osterloh, senior vice president of hardware, wrote in a statement. "We're focused on building our core capabilities, while creating a portfolio of products that offers people a unique yet delightful experience only made possible by bringing together the best of Google software -- like the Google Assistant -- with thoughtfully designed hardware."

As part of the Google-HTC deal, expected to close in early 2018, the search giant gets to pick the best of HTC's talent -- about 2,000 engineers and technical staff -- to help craft the future of Google devices. The same engineers manufactured Google's Pixel devices last year. Google will also license some of HTC's intellectual property.

Forrester Research analyst Brandon Purcell said being more like Apple isn't a bad move on Google's part -- provided Google goes after the right slice of Apple magic.  

"If [Google] is planning on creating a mobile phone to compete with the iPhone, I think it will be about as successful as Google's past forays into the mobile phone arena," Purcell said. "If, however, they task the HTC R&D team with developing next-generation wearables and connected devices for the home, this could be quite successful. Especially if they develop a technology like Apple's new neural engine that allows these devices to run neural networks on the devices themselves rather than in the cloud."

Conversational, connected world

Isaac Sacolick, principal at consulting firm StarCIO and a former CIO, said Google is likely looking beyond smartphones with the Google-HTC deal and that it wants to establish itself as both a software and now hardware IoT platform -- something of interest to CIOs.

"CIOs planning big mobile or IoT investments now have to be looking at Google as an end-to-end hardware and software platform and determine if this combination will deliver better experiences, faster product development times, or other strategic benefits," Sacolick said.

Google wants to remain relevant in a conversational, connected world. If it can't do this, as successful as it has been, it is bound to be disrupted. And if Google can be disrupted, almost anyone can.
Brandon Purcellanalyst, Forrester Research

Broader dissemination of the company's AI voice assistant, Google Assistant, was also on Google's mind when penning the HTC deal, Purcell said. Assistant is currently baked into Google's Pixel phones, Home device and its Allo app, but it doesn't quite have the reach of Amazon's Alexa, Apple's Siri, Purcell said.

"We are still in the early days of conversational computing, but it is bound to become ubiquitous," he said. "The winners in the conversational game will be the companies with the most speech data to correctly train their virtual assistants. Apple and Amazon are continuously training Siri and Alexa.  Lacking similar hardware, Google has been woefully mute on the subject. A suite of new conversationally-enabled devices from Google could change this."

Google's goal in its push into verbal computing is what the company's goal has always been, according to Purcell: to stay relevant.

"Google wants to remain relevant in a conversational, connected world," he said. "If it can't do this, as successful as it has been, it is bound to be disrupted. And if Google can be disrupted, almost anyone can."

If Google succeeds in this arena, that will almost certainly have implications for the enterprise, Purcell added.  "CIOs and IT execs need to start thinking about how their product and service offerings will evolve to succeed in a conversational and connected world. This means developing proofs of concept using speech recognition and natural language processing today."

Android platform, fortified

Tuong Nguyen, principal research analyst at Gartner, said there's another issue at stake in the Google-HTC deal: pushing the Google platform itself.

"I don't think they're trying to directly compete with phone makers like Samsung or Lenovo or LG or even Apple," he said of the Google-HTC deal. "They bought some strategic assets to further their platform goal as opposed to furthering smartphone hardware sales goals. Their goal is to get more people to use the Android platform."

Nguyen compared Google's hardware ambitions to Microsoft's with its Surface devices. With the Surface, he said, Microsoft isn't necessarily trying to beat out the Asus, Acers and Dells of the world; it's just trying to promote its platform via a piece of hardware. He believes the same is true for Google and its current hardware push.

"One of the challenges of Android is to get everyone to standardize," Nguyen said. "You have a number of different OEMs out there using different versions of Android. There's quite a bit of fragmentation in that ecosystem. If they're able to present a device that shows superior performance in terms of the hardware, security, privacy, etc., that might influence Google's partners."

In other words, Nguyen thinks that if Google can demonstrate how to best use the Android platform, the hardware OEMs can take notes and hopefully follow suit -- creating a better Android experience that's in Google's interest. How Apple of them.

CIO news roundup for week of Sept. 18

The Google-HTC deal wasn't the only big tech news this week. Here's what else made headlines:

Facebook agrees to share Russian-linked ads with Congress. Chief executive Mark Zuckerberg announced Thursday that Facebook would provide 3,000 ads to congressional committees investigating Russian efforts to influence the 2016 U.S. presidential election. The plan is one of several steps Facebook is taking to make political advertising on its site more transparent. "Beyond pushing back against threats, we will also create more services to protect our community while engaging in political discourse," Zuckerberg said when making the announcement on Facebook Live. In addition to continuing its investigation into election tampering, Facebook will strengthen its political advertisement review process and increase security investments. Also this week, congressional Democrats requested that the Federal Election Commission consider ways to prevent foreign meddling in U.S. elections, including implementing laws or regulations targeting social media use.

Equifax breach fallout continues. After the massive data breach earlier this month that exposed the personal information of 143 million people, Equifax responded to customer inquiries about the breach by directing them to a fake phishing site. The credit reporting agency set up a website to help customers determine whether they had been targeted, but on multiple occasions the company's official Twitter account mistakenly directed them to a site set up by a software engineer to educate people about the breach. The incident marks another embarrassing development for Equifax as it strives to regain customer trust following the breach. After the breach announcement, Equifax announced that CIO David Webb and CISO Susan Mauldin were "retiring." The new CIO is Mark Rohrwasser, formerly Equifax's international CIO, and Maudlin will be replaced by Russ Ayres, a senior IT manager since January 2015.

SEC discloses hack of corporate filing system. The Securities and Exchange Commission announced Wednesday that hackers last year exploited a software vulnerability to tap into an electronic system used to store public company filings. The hackers targeted the SEC's Electronic Data Gathering, Analysis and Retrieval system, or EDGAR, a comprehensive database with information on thousands of public companies and other financial firms regulated by the agency. In a statement this week, SEC chairman Jay Clayton didn't identify the date of the intrusion or exactly what type of data was obtained. Representatives from the SEC said the hack was detected in 2016, but that regulators didn't learn about the possibility of hackers using the information for illicit trading until August, The Wall Street Journal reported.

Senior Site Editor Ben Cole contributed to this week's Searchlight news roundup.

Next Steps

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What do you see as a key takeaway from the Google-HTC deal?
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It is all about the Assistant. That is the next generation platform.

So Google getting their assistant in 8 new speakers this last month was critical. They have every level from the high end with Onkyo, Sony, middle tier, Panasonic, then JBL, Anker, MobiVox and others.

They landed the Bose headphones. They want to be ubiquitous. The Bose headphones are interesting because when used with the iPhone Google bypasses some limitation Apple causes their assistant on the iPhone.

There should be earbuds also coming and they should work like the Bose over the ear with the iPhone.

Right now Google is miles ahead with their assistant and would appear the space is theirs to lose.
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