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Google Admits Slow Pixel 3 Sales, Hints At New Midrange Phone At I/O Event

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Google didn't sell that many Pixel phones during its most recent financial quarter, the company now admits. In fact, earnings of Alphabet, Google's parent company, were a disappointment for Wall Street, primarily because of the company's underwhelming ad revenue.

Google's hardware team took a blow this past year, as well, due in part to a broader slowdown of global smartphone sales, which has impacted all major players. Google CEO Sundar Pichai said weakened Pixel sales were due to "year over year headwinds," though he notes he has his high hopes moving forward.

"I do continue to be excited to see 5G coming and the early foldable phones, which Android plays a big part in driving," said Pichai, as TechCrunch reports. Indeed, Android has taken an important role creating a brand-new user interface for foldable devices, along with collaborating closely with Samsung on its Galaxy Fold device.

Moving To Midrange

Google is expected to unveil the much-rumored Pixel 3a and Pixel 3a XL next month on the first day of its I/O developer conference, and also officially enter the midrange market. One of the reasons for this is there's too much competition on the high-end segment, what with Apple and Samsung offering devices north of $1,000.

Market Pressures

Alphabet CFO Ruth Porat said that industry-wide pressure on high-end phones led to lower Pixel sales last quarter compared to a year ago. She specifically cited "some of the recent pressures in the premium smartphone market," although failed to specify what those pressures are. She might perhaps be referring to Apple and Samsung's ultra-expensive new offerings, which might possibly be driving down demand and causing customers to hold onto their devices much longer instead of updating yearly.

Google's gloomy smartphone results have caused investors to worry what the company's mobile business is going to look like down the line. One analyst even wondered whether the Pixel line will suffer the same fate as Microsoft's failed Windows Phone line.

Pichai defended Google's hardware efforts, saying that the company is committed for the long term. Google does not break out revenue for its hardware offerings in its quarterly earnings reports, but the segment is growing despite underwhelming sales. This past quarter, for example, it hit nearly $5.5 billion in revenue, which could be due to increased sales of Chromecast dongles, Pixelbooks, Google Home smart speakers, and Nest devices, among others.

Whether or not midrange Pixel phones will help Google recover from a hardware hangover remains to be determined. But it's practically confirmed that such devices are coming — current Pixel devices are currently being offered for $200 off on Google's online store. The deal ends when Google I/O starts.

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