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Why Google’s flagship Pixel smartphone could be a surprising moneymaker

November 28th, 2016 at 10:18 PM
Google Pixel Phone

We’ve seen Google exert strict control over Android before, but the recent release of the Google Pixel marks the search giant’s most concerted effort to date to control the entirety of the Android user experience.

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While Google was previously content to work with hardware partners on Android flagships, the Google Pixel was designed by Google from the ground up. In turn, Google over the past few months has ventured into previously uncharted waters, with the company playing a more active role in sourcing components and managing a whole slew of supply chain deals.

With Google going all-in with the Pixel and the Pixel XL, the search giant certainly has a lot on the line. But as tends to be the case, any initiative fraught with risk also houses the potential for great reward.

To this point, a new research note from Morgan Stanley (obtained by Business Insider) speculates that Google’s decision to get into the smartphone hardware business may net the company nearly $4 billion in revenue in 2017 alone. Specifically, Morgan Stanley anticipates that Pixel sales next year will fall somewhere in the 5 to 6 million range.

While the $4 billion projection is of course chump change relative to what Apple earns with the iPhone ($137 billion in revenue last year), it’s altogether not a bad first start for Google, especially given that the search giant lacks the brick and mortar footprint that Apple’s line of retail stores provide.

One of the more interesting points Morgan Stanley raises is that the success of the Pixel may ultimately help Google firm up the stickiness of its Android ecosystem while also increasing the average revenue derived from users.

People spend three times more money on iOS shopping apps than they do Android ones, but some of the Pixel’s features will help close this gap, according to the bank’s analysts.

Features unique to the Pixel, such as the Google Assistant, the Pixel camera, and Daydream (Google’s virtual reality headset, which works with the Pixel), plus the smartphone’s deeper app integration, increased prominence of Android Pay, and improved computing power (compared to other Android devices), will ultimately lead to users spending more money on Android, according to the research note.

Initial reviews of the Google Pixel have been overwhelmingly positive and it will be interesting to see how the smartphone landscape shifts in the months ahead.

A life long Mac user and Apple enthusiast, Yoni Heisler has been writing about Apple and the tech industry at large for over 6 years. His writing has appeared in Edible Apple, Network World, MacLife, Macworld UK, and most recently, TUAW. When not writing about and analyzing the latest happenings with Apple, Yoni enjoys catching Improv shows in Chicago, playing soccer, and cultivating new TV show addictions, the most recent examples being The Walking Dead and Broad City.

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