Google’s Pixel is no doubt a hit, with some models still out of stock a couple of months after launch. An analysis by Morgan Stanley gives us an even more detailed picture about just how well the phone is doing and what it may mean for Google’s place in the smartphone market.
According to the report, Google’s on track to sell three million phones with revenues around $2 billion. The biggest moneymaker is of course the 128GB Pixel XL, with a gross profit margin of 25 percent. The cheapest phone, the 32GB Pixel, comes in at 22 percent.
It’s good news for Google, though it still pales in comparison to Apple’s $28 billion in revenue it made from selling 45.5 million iPhones in the last quarter of this year alone. Also, Samsung’s Galaxy S7 Edge has spent most of the year as the top-selling Android phone. No doubt we’ll soon see a Galaxy S8 in a few months as Samsung tries to rebound from the Note7 disaster.
Morgan Stanley also notes that Google’s profit estimate of $3.8 billion for the Pixel in 2017 is also derived from continuing to make money off the phone itself. The Google Play Store and deep integration of Google services will lead to additional opportunities to rake in the cash.
As for getting your hands on one now, some Pixel models are still hard to come by. The Pixel XL is currently sold on on the Google Store, while some Verizon customers are continuing to have shipping delays with their XL preorders.
Why this matters: Google’s initiative to compete directly in the smartphone business is definitely paying off. The Apple-like integration of hardware and software is the right approach for a company that is betting heavily on its services being a critical component of your digital life. Further success for the Pixel, however, hinge upon getting the phone into other carrier stores. Currently Verizon is the only carrier to directly sell the Pixel.
