Is the Pixel gamble working for Google?

The numbers seem to suggest that has indeed been a successful evolution of Google’s smartphone ecosystem


Pixel phones are expected to be sold before the curtains fall on 2016, generating about $2 billion revenue for Google.
Pixel phones are expected to be sold before the curtains fall on 2016, generating about $2 billion revenue for Google.

When Google unveiled the Pixel and Pixel XL smartphones in October, there was a lingering sense of déjà vu, considering the fact that we had seen all this before. The promise of a clean Android experience, quick updates to new features and security patches and combination of software and hardware that was well optimized. After all, the Nexus phones have been around for a while now. But, with the Pixel phones, complete with the “Made by Google” branding, the message has gotten across better than ever before. And it was a mighty gutsy move to pit the two phones directly against the Apple iPhone 7 and the iPhone 7 Plus.

The numbers seem to suggest that has indeed been a successful evolution of Google’s smartphone ecosystem. First came the numbers from the latest report by Counterpoint Research, which suggests that the two Pixel phones have already captured 10% of the premium smartphone market in India—a price segment which includes phones priced upwards of Rs30,000. This means the duopoly of its Android rival Samsung, as well as Apple’s iPhone line-up, has been given a bit of a jolt. Apple still had cornered 66% market share, according to the same report. However, for phones that started shipping in India only on 25 October, this is indeed a rather exciting first few weeks.

Also read: Review: Google Pixel XL

Now, financial services corporation Morgan Stanley’s latest estimates suggest that the Pixel smartphones will generate $3.8 billion in revenue for Google in 2017, selling as many as 6 million units. This will be on the back of solid sales that are estimated for the Pixel phones for the remainder of this calendar year—3 million Pixel phones are expected to be sold before the curtains fall on 2016, generating about $2 billion revenue for Google. While these are not in the same league as Apple’s iPhone, they still do indicate a shift in power within the Android ecosystem—about 212 million iPhones have been sold in the 2016 financial year, which means about $13.7 billion in revenue has been generated for Apple.

Pixel signifies a new chapter in Google’s Android phone history. Till now, Google had the Nexus line-up of phones, launching one or two phones every year, and relied heavily on brands such as HTC, LG, Motorola, Samsung, Huawei over the years to provide the hardware. That meant Google had limited control over the hardware, which meant that Nexus phones never really were the benchmark devices in the Android ecosystem—Samsung always stole that mantle, effortlessly.

Also read: Google Pixel phones: Know each variant before placing an order

But the Pixel package includes artificial intelligence integration with Google Assistant, a tweaked operating system, Daydream virtual reality platform, apps that are working better with the software and also the top of the line hardware to drive the productivity and entertainment tasks. And all that shows, as the user experience is significantly better than any other similarly priced Android smartphone. Suddenly, users are not entirely against the idea of splurging so much for a top-notch Android phone, because it genuinely offers them something extra, compared to rivals made by Samsung, HTC, LG, Sony and the gamut of Chinese smartphone makers. Google’s departure from the mid-range and upper mid-range price segments, to the genuinely premium price bracket, has been smoother than many would have expected.

Also read: Google Pixel: Everything you need to know

While it may be riding high on the success so far, Google could do well to learn some tricks of the trade from Apple. The primary aspect would be the Android updates themselves. iPhone users are assured that their phone will be running the very latest iOS update within weeks, if not days, of release. On the other hand, Android Nougat (7.0) runs on only 0.3% of all Android phones out there right now, a large chunk of that being the Pixel phones themselves. Secondly, analytics company AppsFlyer suggests that iOS users spend almost 2.5x more than Android users, on app purchases. If Google can get more users to spend more on apps on their platform, monetization from search will also boost Google’s advertising numbers.

Google has hit the proverbial jackpot with the buzz around the Pixel phones, which are also translating into solid sales. And if we are to assume that the same update cycle continues, the next Pixel phones won’t arrive before the second half of 2017. The likes of Samsung, HTC and Sony will have some worries to content with, in the meantime.

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