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After several years of fighting Apple (AAPL) – Get report and Samsung (SSNLF) in the high-end smartphone market with very mixed results, Google (GOOG) – Get report seems to be throwing in the towel. And one has to wonder here what could have been.
As many others have pointed out, Google’s $ 699 Pixel 5 phone, which was officially unveiled on Wednesday, has specs that fall short of those of many high-end Android phones, like Samsung’s Galaxy S20 line or the OnePlus 8. Pro. This is:
- The Pixel 5 uses Qualcomm’s (QCOM) – Get report Snapdragon 765G processor, instead of its flagship Snapdragon 865G.
- While many high-end Android phones now have 6.5-inch or higher displays with 120Hz refresh rates, the Pixel 5 has a 6-inch display with a 90Hz refresh rate.
- The Pixel 5 (like the Pixel 4) has only two rear cameras at a time when most Android phones over $ 500 have three or four.
The price of the Pixel 5 undoubtedly makes it cheaper than phones that the Galaxy S20 and S20 Plus ($ 999 and $ 1,199 MSRP) and the OnePlus 8 Pro ($ 899 MSRP). But at a time when the smartphone has become the primary computing device for a large percentage of consumers, many consumers, including many in the US, which appears to be by far the largest market for the line. Pixel, they are clearly willing to pay a premium for top-notch specs.
Additionally, the Pixel 5’s specs are also arguably lower than Samsung’s Galaxy S20 FE and standard OnePlus 8, which start at $ 699. The latter two devices include 6.5-inch displays (120Hz in the case of the S20 FE), three rear cameras and a variant of the Snapdragon 865, in addition to having batteries somewhat larger than those of the Pixel 5.
Low sales expectations
Put all of this together, and the Pixel 5 has the makings of a niche product. In fact, Japan’s Nikkei reported on Wednesday that Google plans to make fewer than 1 million Pixel 5 units this year, and that production could be as low as 800,000.
The Nikkei added that the total 2020 production for the Pixel 5 and Pixel 4a 5G of $ 499, which was also unveiled yesterday, will amount to 3 million units. For comparison, Apple has reportedly set a 2020 production range of 75 million to 80 million for the next-gen iPhones that it is expected to introduce this month.
In fairness to Google, older-generation phones that were more firmly pursuing high-end buyers, such as the Pixel 4/4 XL and Pixel 3/3 XL, also did not record highly successful sales.
Even in the fourth quarter of 2019, before COVID-19 started to hit, Google’s hardware sales posted an annual drop. And with the company claiming that its smart speakers and displays sold well over the holidays, the Pixel 4 lineup was seen as the culprit.
Furthermore, research firm IDC estimates that Google’s smartphone shipments fell to just 1.5 million in the first half of 2020 from 4.1 million the previous year. While the smartphone industry in general suffered during this time, such a drop still implies a loss of shares.
What Google’s high-end pixels could have done better
The relatively limited international distribution and carrier support had something to do with the limited upper-end traction of the Pixel line. The Pixel 4 line, for example, was still only sold in nine countries.
But with those countries, including the US, Japan, the UK, and Germany, other factors were clearly at play as well. On a general level, Google struggled in the high-end smartphone market because it didn’t pay as much attention to what high-end phone buyers wanted as companies like Apple and Samsung.
For one thing, the Pixel line created a small die-hard fan base thanks to a number of unique features. Among them: world-class cameras that include machine learning features like Night Sight and Super Res Zoom; a fairly clean and uncluttered user interface; and much faster access to new versions of Android than many rival devices have.
But on the other hand, Google didn’t appreciate the importance of three things that many high-end phone buyers cared a lot about. Specifically, appearance, camera count, and battery life.
While Apple, Samsung, and others built eye-catching flagship models with edge-to-edge displays, Google opted for more utilitarian designs with larger bezels. The company also consistently put fewer rear cameras on its phones than rivals (the Pixel 4 had two of them, while older Pixel models only had one) in the belief that its machine learning intelligence served to compensate. And last year, it didn’t join the industry-wide trend of packing bigger batteries into high-end phones.
On some level, it seems that Google, a company that prides itself on having an engineer-driven culture, built phones that its engineers and die-hard Pixel fans wanted to see the facts, rather than paying close attention to what the market was. signaling.
And after years of watching this strategy fail to produce huge success, he now seems content to be a mid-range focused niche player.
From a financial point of view, the lack of a highly successful smartphone business is far from devastating for Google, a company that generates more than $ 120 billion in annual advertising sales and has Google Search the top spot. most profitable advertising business on the planet.
But in light of all the ways Google’s Pixel phones to have stood out from the crowd over the years, it’s not hard to think of an alternate story where things turned out a little different.
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