New estimates from Morgan Stanley project that Google’s debut Pixel smartphone will generate $3.8 billion in revenue for the company in 2017.
The global financial firm expects that Google will sell between 5 million and 6 million Pixel phones in 2017. Additionally, the firm estimates that Google will have sold close to 3 million Pixels in the last three months of 2016 — generating an additional $2 billion since its launch in early October of this year. The Pixel phones retail between $649 and $869.
By comparison, Apple sold 212 million iPhones in the 2016 financial year, totaling $137 billion in revenue. Morgan Stanley also estimates that the Pixel is about half as profitable for Google as the iPhone is to Apple — generating a 22 to 25 percent gross profit margin versus iPhone’s 41 percent.
Initial reviews of the Pixel and Pixel XL were mixed at best — signaling that the Pixel’s sales could soon be fated to the same smartphone slump other device makers have experienced throughout 2016.
Alphabet, Google’s parent company, saw sales up by 20 percent to $22.4 billion in the third quarter of 2016. That makes seven quarters in a row of growth in the top line by double digits. Though the Pixel didn’t contribute to their third-quarter results, the CEO mentioned the Pixel and AI Google Assistant as continued movement into new products.
Google expects that the Pixel’s deeper app integration, the inclusion of Google Assistant and Android Pay’s continued proliferation will ultimately lead to users spending more on Android payments and shopping apps than before — meaning more monetization opportunities from advertisers for Google in the future.