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Alphabet Inc. should give every household in America a free Google Home Mini smart speaker, a Morgan Stanley analyst suggested Thursday.
The speakers are currently selling $ 49 each, which would mean spending about $ 3.3 billion. Brian Nowak, an analyst at Morgan Stanley, wrote Thursday that it would be a "small price tag" for Google-Alphabet
GOOGL, + 0.88%
GOOG, + 0.93%
. He estimated that the company could offset this cost about five times through operating profits that it generates more generally from retail research over the next five years.
Nowak worries that Google is losing ground for Amazon.com Inc.
AMZN, + 2.47%
when it comes to retail search queries, since more purchases are made by voice commands and Amazon is widely regarded as having a ahead of Google in terms of penetration of smart speakers. It predicts that about 70% of households will have speakers by 2022, and that Amazon will have 1.3 times more speakers in homes than Google will at that time, in the absence of any dramatic action.
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Morgan Stanley predicts that Alphabet will bring $ 44 billion in research revenue from detail up in 2022, or nearly $ 16 billion in operating profit.
Amazon recently incorporated voice-activated televisions, and Nowak believes that more screen-oriented options could "speed up voice trading." Only a small portion of those who use voice assistants use them to do their shopping.
See also: How we use voice assistants, in one table
"In this context, we argue that Google needs more smart devices / speakers in self, "Nowak writes.
True, the mere presence of smart speakers does not mean that people will start shopping with them. Many of them are shopping perfectly well on their phones, or they want to improve the voice search experience, warned Nowak. In addition, it is possible that Google is already too late due to strong penetration in the United States
. "These homes might be less likely to adopt Google Home … even though it was free," he said. Nowak has an overweight position in Alphabet stocks, and he has raised his price target Thursday to $ 1,250 from $ 1,200.
Do not miss: Google's plan for Android TV looks familiar
Google stocks are up 16% over the last 12 months, while the S & P 500
SPX, + 0.62%
increased by 11%.
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