Alphabet Inc. should provide a free Google Home Mini smart speaker to every household in America, a Morgan Stanley analyst suggested Thursday.
The speakers are currently selling $ 49 apiece, which would cost about $ 3.3 billion. Morgan Stanley analyst Brian Nowak wrote on Thursday that this would be a "small price for Google Parent Alphabet"
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. He estimated that the company was able to compensate for these costs approximately fivefold over the operating profits it generally generated from the dealer search over the next five years.
Nowak fears that Google is losing ground to Amazon.com Inc.
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when it comes to retail search requests, as more purchases are made via voice commands and Amazon is widely considered the leader in the penetration of smart speakers. He estimates that by 2022, approximately 70% of households will have speakers, and that Amazon will have 1.3 times more speakers in homes than Google at this time, with no dramatic action.
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Morgan Stanley estimates that by 2022, Alphabet will bring in nearly $ 44 billion in retail research revenue of $ 16 billion Dollar operating profit.
Amazon has recently entered voice-activated TVs, and Nowak believes that more screen-oriented options "could speed up linguistic trading." Only a small proportion of those who use language assistants use it for shopping.
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"Against this background, we argue that Google needs more appliances / smart speakers in people's homes," Nowak wrote.
Granted, the mere presence of smart speakers does not mean that people go shopping with them. Many are perfectly fine with their mobile phones, or they want the voice search to improve, Nowak warned. In addition, given the strong market penetration in the US, Google could come into play too late.
"These households could not choose to use Google Home … even if it were free," he said. Nowak has an overweight rating on its shares and raised its price target on Thursday from $ 1,200 to $ 1,250.
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Google shares have risen 16% in the last 12 months, while the S & P 500
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has risen by 11%.