Pixel phones estimated to generate $5.8b in revenue for Google
According to a new report from Morgan Stanley, the financial firm estimates that the Google Pixel will generate more than $3.8 billion in revenue for its company in 2017. The report says this number is based on estimates that Google will sell between five and six million Pixel phones next year. That’s on top of the 3 million sales projected for the end of 2016, which will generate an additional $2 billion in revenue.
An interesting note in the report is that the Pixel is half as profitable for Google as the iPhone is for Apple, thanks to the higher cost of materials in the Google Pixel. Its gross profit margin is only estimated to be between 22-25% according to this report.
That’s quite a bit less than Apple’s own profit margin for its iPhone 7, which is around 41%. Apple sold 212 million iPhone devices in 2016, which generated more than $137 billion in revenue for the company. People also spend three times more money on iOS shopping apps than they do on Android devices, but the report is banking on Pixel-exclusive features to help narrow that gap.
The research indicates that exclusive features like Google Assistant, the Pixel camera, Daydream support, and the increased focus on Android Pay will help Google narrow the gap so users begin spending more money on Android. That has a double benefit for Google, as the report says that advertisers are expected to spend more to reach those who spend heavily on their mobile phones, so Google’s incentive for getting more people into its Pixel ecosystem is two-fold.