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Morgan Stanley estimates Google to sell 5-6 Mn Pixel devices and generate $4Bn+ in revenue next year

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Google finally forayed into the hardware segment with the launch of its ‘Made by Google’ products, especially the Pixel smartphones a couple months ago. Launched with the primary aim of providing a guideline for building a perfect Android smartphone and competing with its arch nemesis Apple, the demand for the Pixel has been exceeding expectations. But will Google be able to sell a lot of its Pixel phones?

Well, investment firm Morgan Stanley estimates that Google is on track to sell over 3 billion Pixel smartphones in the last three months of 2016. This will generate a revenue of over $2 billion for the company, which is expected to about double the next year. The numbers will be on the lower side for Google as compared to Apple, which is selling about 45.5 million iPhones and generating $28 billion in revenue in any particular quarter.

As for 2017, the report suggests that the tech behemoth will manage to sell about 5 to 6 million Pixels next year. This, in return, is expected to bring in about $3.8 billion in revenues coupled with an increased usage of its services such as Android Pay, Assistant, and mobile search. This will also add to an increase in ad revenue, which is still considered the primary source of income for the search giant. The company has recently also been shifting its focus towards mobile by introducing a separate search indexmore prominent than the desktop one.

It also continues to add that the Pixel lineup will be half as profitable for Google as the iPhone is for Apple because the former is using more costlier and high-quality materials for building its sleek and beautiful devices. The Pixels be able to deliver a profit margin of about 22%-25%  as compared to the 41% margin Apple is gaining on the sale of iPhones. But, this could increase in the near future if the latter plans to move its manufacturing plants to the U.S under the pressure of President-elect Donald Trump. Cupertino has already instructed its partners to look for opportunities back home.

Scenario in India

With all the hype surrounding Apple and Samsung smartphones in India, one wouldn’t expect Google and its basic ‘Android’ offering to fare well in the country. Also, the hefty price tag of over Rs. 65k is another reason for us doubting the success of the said smartphone in India but reports suggest otherwise.

It seems like Google’s Pixel line-up is off to a wonderful start and has already captured 10 percent of the premium smartphone market in the country. Over 33,000 units of the first-ever hardware product made by Google have reportedly been sold until the end of October. This puts the tech behemoth at the second spot, just behind Apple and before Samsung. The Korean smartphone maker has slid to the third position due to the – yeah, you guess it right! – Galaxy Note 7 explosion debacle.

The Pixel handset has captured the interest of consumers around the world due to its excellent build quality (can’t expect less, when HTC is manufacturing these devices), vanilla Android experience, the oh-so-smart virtual Assistant, and a rear camera offering better even than the iPhone – first choice of use customers in India. This growth rate also adds to the growing adoption rate of the latest iteration of Android in the country, which usually continues with older offerings.

A hands-on guy fascinated by new apps, technologies and enterprise products.

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