Google’s Pixel smartphone gamble will pay off in 2017 and the phones could generate over $3.8 billion in revenue for the company, according to a report by financial services firm Morgan Stanley. Business Insider, which reported the numbers, says Google will sell 5-6 million of these phones in 2017, and towards the end of the 2016, it will generate around $2 billion sales from Pixel devices. Of course, these numbers are still very small when compared to Apple’s iPhone where the profit margins are higher, with Cupertino selling well over 200 million of these devices in 2016 alone.
According to Morgan Stanley, Google’s Pixel will have a 22-25 per cent gross profit margin. Google has already indicated that it is in the long run when it comes to the Pixel phones, and this isn’t a one-off project.
“People need to know that with they’re going to get a great phone year after year, and they will just buy next year’s device. They will understand that it stands for high quality, the best product from Google. We’ve been wanting to do this for a lot of time,” is what Brian Rakowski, VP Product Management at Google, had told select media after the launch of the Pixel smartphone.
Google has made it clear the Pixel is a premium device, which will challenge Apple’s iPhone, and it won’t be an easy task. In India, the Pixel starts at Rs 57,000 going up all the way to Rs 76,000, and in the US it is priced $650 and above. This is firmly iPhone territory, and Google has no qualms tackling Apple on the price band.
It looks like the Pixel will end up being beneficial to the company in the long run. Morgan Stanley says the Google Pixel phones could drive mobile ad monetisation for the company in the future if more consumers end up using these phones. The highlight of the Google Pixel phone is not just the pure Android, but also the focus on the Google Assistant, and the fact that these devices are entirely dependent on the Google universe.
So while Google might not be biggest smartphone manufacturer with the Pixel, like say in the league of Samsung, but it could well take a significant piece of the pie in the premium smartphone segment in 2017.