Google Pixel Phones To Generate About $4 Billion In Revenue Next Year, Morgan Stanley Analysts Say
Google's pair of Google-branded flagships, the Pixel and Pixel XL, are expected to rake in quite lofty profits for the company, according to analysts.
Financial services firm Morgan Stanley estimates that the Pixel will generate $3.8 billion in revenue for Google in 2017.
Google Will Earn Nearly $4 Billion In Pixel Sales
According to a report by Business Insider, which included Morgan Stanley's research notes, the firm expects that Google will sell around 5 or 6 million Pixel handsets in 2017, amounting to $3.8 billion.
Morgan Stanley also predicts Google to sell 3 million Pixel handsets from October to December this year, tallying to $2 billion.
"[W]e believe the Pixel is important as [Alphabet] works to provide users a more integrated and consistent Android experience aimed to improve Android user mobile search monetization," wrote analyst Brian Nowak in a research note.
Google's flagship smartphone is looking to be a strong contender in the very competitive smartphone race even without features other smartphones in the same or in the lower-tier price points have, a couple of which being water resistance — at least not officially — and wireless charging.
The Google Pixel is the first phone from Google to shed the Nexus branding scheme, deciding to simply use its own name after a collaboration fallout with Huawei, who was supposed to manufacture Google's Pixel pair.
Huawei wanted out upon learning of Google's demanding terms about branding, which required Huawei not to embed its logo on the phone's body. Struggling phone maker HTC then gladly took the chore out of Huawei's hands and manufactured the Pixel and Pixel XL.
Not As Profitable As Apple
While $4 billion in sales spells a great deal for the company's first attempt at a self-branded flagship pairing, the Pixel handsets fare lower than Apple's iPhone sales. Apple sold 212 million iPhones this financial year, which totaled to $137 billion in revenue for the Cupertino company.
Apple also netted $28 billion in revenue from 45.5 million iPhones sold in the last quarter of 2016.
The Morgan Stanley research estimates that the Pixel will be half as profitable as the iPhone, relative to its companies, owing to the Pixel's high-cost materials.
The iPhone 7's gross profit margin hovers nearly around 41 percent, much higher than the Pixel's 22 to 25 percent gross profit margin, which changes according to the model. The iPhone's gross profit margin, as compared with the Pixel's, may seem imposing, though it's important to note that the figure has significantly declined for iPhone, which enjoyed 57.7 percent back in 2009.
Beyond The Pixel
Google, however, is expected to reap profits in 2017 from other fronts as well, with Nowak having estimated $6.5 billion in total from Pixel units sold, the company's expanded text ads, a new mobile advertising unit and Maps.