Project Ara – The Holy Grail Pt II.

Reply to this post

Different game but the rules stay the same.

• Google has scaled back the ambitious objectives of Project Ara (see here) to something more realistic, but to succeed it will still have to obey the four rules of the road (see here).
• Prior to its reorganisation, Project Ara aimed to provide a device where every major component was modularised and could be swapped with a different specification.
• This creates three enormous challenges:
  • First. Each module requires an individual case and a connector. These take up space, making the resulting device bulkier and less sleek-looking than a normal device.
  • Second. Each swappable component has to remain distinct from all the others. Integrating components together is a tried and tested method of cost and size reduction meaning that a modular device has always been more expensive to make.
  • Third. Every swappable component has to be tested with every other in every possible configuration to ensure that they all work together properly. This means that testing and certification is much more onerous, meaningfully increasing development costs.
• These challenges made it almost impossible for Google to produce a modular device that was both ergonomic and competitive in terms of price.
• In the last 12 months, Google appears to have realised this and has scaled back its ambitions such that the guts of the device remain the same and just the peripheral components can be swapped out.
• Examples of these are cameras, storage, speakers, sensors, batteries and so on.
• The idea now is for the user to be able to mix and match features that users are unable to get anywhere else and thereby provide something different.
• This change substantially reduces the three challenges above but does not obviate the device from having to be both ergonomic and economic in order to succeed (see here).
• This means that the device must be no bigger than a competing, non-modular device of the same specification and it must come at the same price.
• The problem is that even with these changes, the current prototype looks weird and is bulkier than other devices with the same specification.
• From the videos that Google put up at I/O, I think that it intends to market the device by making its funky form factor a selling point in a sea of sameness thereby addressing the ergonomic issue.
• Google has plenty of cash on the balance sheet to absorb losses from selling the product at a competitive price, but with the new age of fiscal discipline that has been ushered in, it may not be willing to do so.
• Furthermore, LG already has a similar device in the market and while its modularity is far less, it has done a much better job in terms of ergonomics and form factor.
• Consequently, while Google’s task is now undoubtedly easier, Project Ara must still obey the four rules of the road which remain:
  1. It must be the same size and weight as competing products.
  2. It must make no compromises in terms of styling,
  3. It must offer the same functionality as competing products.
  4. It must come at the same price point.
• If all four of these can be fulfilled then there is a real chance of success as the user is being offered something new without having to make any compromises.
• Even with the changes that have been made, I think that Project Ara is still some way adrift of meeting these rules but it is certainly closer than it was 12 months ago.
• The short-term outlook for Alphabet remains healthy but the fact that this is more than reflected in the valuation leads me to continue to prefer Microsoft and Samsung for the short-term and Apple for the long term.