Google Glass Could Shatter the Competition

Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

A report released recently by Forrester says that Google's (NASDAQ: GOOG) upcoming Google Glass will be as popular as the iPhone -- so is that your cue to buy this stock?

It's easy to get excited about a product with the potential to be as groundbreaking as the iPhone, which took the world by storm in 2007. Google Glass seems like a revolutionary device. In fact, the Forrester report stated that 21.6 million consumers online would wear the product, which is about 12% of the population. I suspect the final number would be more if the device catches on and becomes a fashion statement, kinda like the iPhone.

Google Glass is a set of augmented reality eyewear that can take photos, record videos, get directions, chat, browse the Internet, and more. The glasses are slated to be available for purchase sometime in 2014, according to CNet.

While the appeal of the product is still speculatory, the potential breakthrough is worth picking up shares of Google. After all, the company is also working on self-driving cars and balloons that could facilitate Internet access from anywhere in the world. Not to mention that the firm already has an angle on dozens of components of modern technology. Does the Internet ring a bell?

Google is also locked into international expansion, and announced on June 20 the opening of Android Nation retail stores in India. That could trigger further growth in the company's revenue, which has already shot up over 112% over the last four years. And with a price-to-earnings ratio of 26.8 against the industry average 21, investors believe Google will experience a moderate amount of growth in the years ahead.

Google stacks up against competition

Regardless of whether or not Google Glass becomes as big as the iPhone, the firm is still more attractive than competitors Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT)

What's going on with Apple: Either Apple isn't disclosing new technology that it is working on, or it isn't on the verge of any major breakthroughs. Since the iPad, the firm hasn't released anything substantial, other than upgrades to its flagship devices. Not much has happened with Apple TV, which many thought would replace conventional television with a new way of browsing shows online on the gadget. Rumors about the capabilities of the TV that were milling about in 2011 didn't prelude a single significant breakthrough.

I wouldn't give up on Apple just yet, though. The firm has been known to surprise with new hardware releases. Furthermore, the company could be working on a cheaper iPhone that could prosper in the developing world. Investors expect the company to have average growth, due to a price-to-earnings ratio at 10.1 compared to the industry average of 16.5. Don't let your emotional ties to your iPhone or iPad guide how you feel about Apple, as the company really could go either way at this point.

What's happening with Microsoft: A company spokesperson said that the firm is releasing the Xbox One in November. While the gaming device could be groundbreaking, it doesn't add up to a cultural revelation similar to the possibilities of a device such as Google Glass. As for the company's software breakthroughs, I think most people know about the Windows 8 flop by now. If not, the PC operating software was deemed user-unfriendly.

The firm continues to have the appeal of Microsoft Office suite, however, and that is adding a considerable amount to revenue for the company. Due to the fact that Office hasn't integrated with the iPad, though, Microsoft is losing out on about $2.5 billion in revenue, according to Morgan Stanley analyst Adam Holt. Apple and Microsoft were rumored to be in talks about adding Office to the iPad, but those discussions fizzled after Apple wanted 30% of sales revenue.

The risk in buying Google

In short, there isn't much risk considering the upside potential of Google. The company is financially sound with or without releasing a major breakthrough in technology such as Google Glass. However, that gadget looks like it has the green light for 2014. Despite what may happen with Google Glass or any of the other Google X projects, the company looks to at least be making a stab at inventing, something that Microsoft and Apple haven't done much of lately.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.


Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus