Focus Shifting From “Mobile First” To “AI First”

Jefferies traveled to Mountain View, CA and sat alongside 7,000 strong for Alphabet Inc.’s (NASDAQ:GOOGL) Google I/ O. Google introduced new products focused on incorporating machine learning and native language processing into day-to-day tasks of users. The focus is shifting from “mobile first” to “AI first” as Google drives that vision forward across all products and platforms. GOOGL remains a franchise pick as the firm came out of the conference optimistic towards the strides they are making in AI.

Google introduced a slew of new product features with the underlying theme of improvement through AI / Machine Learning present throughout. Google continues making strides towards its mission statement “to organize the world’s information and make it universally accessible and useful”. The firm provides its five most standout announcements from the conference below:

Google Lens allows Android users to analyze their surroundings via the Google Assistant. Simply point the phone at a restaurant or storefront and get ratings information, or aim the camera at a flower to identify the species. The Google Lens is a creative way in which users can further incorporate AI into daily activities via their mobile device. Advanced image recognition and computer vision powers the feature as Google continues to expand the skillset of the Assistant.

Google Home continues to expand its capabilities, and will soon be able to make phone calls. In the coming months Google Home owners will be able to place free calls using either their mobile number or a private number. The feature will be compatible with the Home’s multi-user platform (Home can recognize up to 6 different voices) with only outgoing calls initially available. Additional new features include proactive assistance (traffic alerts, reminders, etc.), added streaming services for both music and video (Spotify, SoundCloud, Hulu, HBO Now), and a TV interface. Google also announced that Home will be expanding into Canada, Australia, France, Germany, and Japan. The firm views the added features as a positive as Google aims to compete and differentiate its product from Amazon’s (AMZN, Buy) family of Echo products.

Google is expanding AI into Google Photos by integrating Google Lens & introducing physical photo books. Google is incorporating its computer vision and machine learning intelligence into Google Photos, adding powerful tools to the over 500MM active users who are uploading 1.2B photos daily. Google also announced machine learning curated physical photo books for users. While Photobooks won’t move the needle for Google, the firm sees this announcement as a net negative for SFLY (Hold). SFLY has been working to incorporate these same concepts into its app, but it believes that Google will win in terms of the AI backend. Photos is also adding user experience tweaks such as the ability to easily share photos with other users, suggested sharing (based on face recognition), and shared libraries.

YouTube viewers are now watching more than 1B hours of video a day, a 10- fold increase since 2012. Users upload 65 years of video each day, or 400 hours of video a minute. The gains are in part driven by AI with Google’s algorithms performing better at surfacing content that appeals to each individual user, resulting in increased watch time. Google also announced that its new OTT service YouTube TV will soon include 360 degree videos.

The Google Assistant will be immediately available as a standalone app on iPhone and iPad. API restrictions will limit certain functions, but the announcement allows the Assistant to compete directly with Siri on Apple devices. Google aims to make the assistant more conversational and natural in usage, rather than just acting as a simple voice enabled search engine.