Google Inc (GOOG): What’s The Worst Thing That Could Happen?

A few months back, investors were contemplating the idea of Google Inc (NASDAQ:GOOG) setting up shop to follow in the retail footsteps of rivals like Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT). At the time, the idea was that the search giant would use physical storefronts to demo a wide range of devices, including Chromebooks and Nexus gadgets, among others.

As if that notion wasn’t doomed already, considering that Google implements a no-margin strategy with its hardware and would have to absorb all of the operating expenses directly, the rumor has gotten stranger.

What’s the worst thing that could happen?
Business Insider is reporting that these potential stores would only sell Google Inc (NASDAQ:GOOG) Glass, citing a “second-hand” source. These “Glass Stores” would carry the Glass branding front and center, and sell nothing but the search giant’s wearable tech. It would be a huge mistake.

First off, Glass is very clearly going to be a niche product in the beginning. The adoption ramp for a technology like Glass can be long and arduous, and operating retail locations for the duration of that ramp to the mainstream (which may never happen) will be costly.

Over the past month, the perception of Glass has deteriorated and the new device may be destined to become the next Segway or Bluetooth headset, both of which are only used by a sliver of consumers.

There are still some challenges to be worked out, too. Not only does Glass present some very unique social dilemmas — enough of a concern that The Wall Street Journal just published an etiquette guide — but there are bugs to address with the technology itself.

Saturday Night Live even took some shots at Glass last weekend, highlighting the strange head gestures and unresponsive voice commands. The skit is clearly exaggerated, but The Verge (whose reporters have experienced Glass first-hand) even called it “not that far off from what it’s actually like to use Glass.”

Google Inc (NASDAQ:GOOG) also doesn’t have a good track record with selling directly to consumers. Big G’s first foray with the Nexus One in 2010 was a debacle, and only recently has it started to figure out direct device sales through Google Play. The biggest obstacle to date on Google Play has simply been talking hardware partners into producing sufficient inventory of low-margin devices that undercut their other products.

On the other hand, Glass does seem like it needs to be experienced first-hand to appreciate the value proposition. Relying on third-party retail sales reps is hardly ideal, but neither is setting up first-party retail locations.

One of Google Inc (NASDAQ:GOOG)’s strengths has always been experimentation, but those experiments must be cheap in case of failure. Opening retail stores for just Glass would be an expensive mistake.

The article The Dumbest Thing Google Could Do With Google Glass originally appeared on and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL), Google Inc (NASDAQ:GOOG), and Microsoft Corporation (NASDAQ:MSFT).

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