The big picture: Is Google taking the Pixel as seriously as it should? Perhaps not, according to one investor, who likened Google's hardware approach to that of Microsoft from a decade ago. There's still time to make some corrections and it could start next week at Google I/O.
Google parent company Alphabet in its recent earnings call took a moment to address Pixel hardware sales. CFO Ruth Porat didn’t go too deep on the matter but what she said was enough to get people’s attention and warrant a follow-up from one investor on the call.
Here’s the full quote courtesy of Ars Technica:
Hardware results reflect lower year-on-year sales of Pixel, reflecting in part heavy promotional activity industry-wide given some of the recent pressures in the premium smartphone market.
Without giving away numbers, Porat revealed that the Pixel 3 isn’t selling as well as its predecessor. She also concedes that there is some serious competition in the premium smartphone market. Again, we don’t know how “bad” it is for the Pixel 3 but as Ars notes, it was “bad enough” to be mentioned in the earnings call.
In addition to questionable changes like the move to an all-glass back and sticking with just 4GB of RAM, Google’s distribution network for the Pixel pales in comparison to the competition. As Ars highlights, the Pixel 3 is available for sale in just a dozen countries and has zero retail presence. Apple’s iPhone, meanwhile, can be found in some 70 countries around the globe, in more than 500 Apple retail stores and is offered at virtually every carrier store in the US. Samsung is doing even better with the Galaxy S10, offering the flagship in around 130 countries worldwide.
Later in the Q&A portion of the call, Bank of America’s Justin Post said the following:
On the hardware business, I think there's some concerns that it's just not getting off to a really strong trajectory. [There are] some comparisons to Microsoft 10 years ago. Really, just help us understand how that hardware business is important to Google and how you're thinking about it long term.
Google CEO Sundar Pichai handled the inquiry about as gracefully as possible, highlighting the company’s success with its Google Home smart speaker before transitioning into talk about the future of the mobile industry including foldables and 5G.
What could help Pixel sales, however, is a cheaper variant which is expected to be unveiled at Google I/O next week. An entry or mid-range Pixel would allow Google to target a different demographic than the big guys and their high-end flagships.
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