Google makes a lot of bets on products and services that end up falling apart a few years down the line. Google hasn’t been afraid to pull the plug on these projects, even after years of development. Google abandoned products like Reader, Google+, and Tango over the years, but some are starting to wonder if its Pixel smartphone initiative is destined for the same fate. In the company’s recent earnings call, CFO Ruth Porat blamed declining smartphone sales for Google’s disappointing hardware numbers.
Google announced the first Pixel phones in 2016, following that up with refreshed Pixels in 2017 and 2018. Google doesn’t break out earnings per division (Google is just one part of the Alphabet umbrella), but Porat confirmed during the call that Pixel sales in Q1 2019 have dropped compared with last year. She blamed “recent pressures in the premium smartphone market.” Vagueness aside, this suggests that Google’s already small segment of the smartphone market is shrinking.
The Pixel 3 and 3 XL are not bad phones, but they come with some compromises at a time when consumers feel less pressure to keep upgrading. Everyone (even market leaders like Samsung and Apple) has felt the crunch as the smartphone market becomes saturated. Google is asking enthusiasts to put up with less RAM and storage than many competing phones, and casual buyers will probably be put off by the obscenely large notch on the 3 XL and less plentiful purchasing options.
The prices have also shot up this year with the smaller Pixel 3 climbing to $ 800 ($ 150 higher than the Pixel 2). The 3 XL is $ 900, just like the Galaxy S10. This is most likely Google’s most significant barrier. When companies like Samsung that focus almost exclusively on hardware are selling in the same price range, Google’s phone is going to come out looking like a worse deal. That’s not to say the Pixels are a bad deal. Google’s phones have the best camera performance and OS update guarantee of any Android devices. However, Google might not be able to convince consumers of that quickly enough to compete in a stagnating market.
Google might be able to turn the corner with the upcoming Pixel 3a and 3a XL. These budget-oriented Pixels will most likely be unveiled at the Google I/O conference next week. These phones are expected to sell for several hundred dollars less than the current Pixels but retain many of the flagship features like the fantastic camera and timely updates. Whatever happens with these phones, Google CEO Sundar Pichai claims the company is in the smartphone game for the long haul.