Jason Cipriani tells Karen Roby that Google’s latest smartphone has a lot to like, but some key flaws. Read more: https://zd.net/3626TYX
How many Pixel 3 devices did Google sell in the past year? You won’t find that sales total broken out in the company’s quarterly financial reports, but if you’re willing to dig deeply enough, you can get a decent estimate.
So I did exactly that. Spoiler: The numbers aren’t pretty. The Pixel 3 devices went on sale in October 2018. By my estimate, between October 1, 2018, and September 30, 2019, Google sold no more than 12.8 million devices from its Pixel 3 family, and the actual total might well have been well under 10 million.
Google’s parent company, Alphabet, doesn’t disclose Pixel sales in its mandatory SEC filings, so those numbers are necessarily approximate. Allow me to explain the calculations.
The Pixel line is included as part of the Google Other Revenues line in those SEC 10-Q (quarterly) and 10-K (annual) filings. As the company notes in its filings, “Google other revenues consist primarily of revenues from: Apps, in-app purchases, and digital content in the Google Play store; Google Cloud offerings; and Hardware.” That total is 13.6-14.6% of Google’s total revenue, with the remaining 85+% coming from advertising sales.
With billions of Android devices on the market, revenues from the Google Play Store are substantial, almost certainly representing at least half of that non-advertising revenue. In addition, Google makes a substantial amount of revenue from cloud services such as G Suite and its Google Cloud platform.
Meanwhile, the hardware segment includes products besides smartphones, with the most notable family member being the Nest product line. As of Q1 2018, Alphabet moved Nest revenue from its Other Bets category into Google’s hardware segment. Using the recast financial results from 2018, I calculated that Nest revenues for 2017 were $726 million, or 5% of the Google Other Revenues line.
Because Alphabet reports its earnings on a calendar year basis, it takes a little reverse engineering to calculate the total Google Other Revenues for the year ending September 30, 2019, but it’s not difficult. Taking the totals for Q4 2018 and the first three quarters of 2019, we get a total of $24.545 billion.
And from that point, we have to make some assumptions to try to determine how much each segment contributed to the total.
If we assume, generously, that hardware accounts for one-third of that Google Other Revenues total and that Pixel represents 80% of that segment (with Nest, accessories, and smart speakers representing the rest), then the Pixel 3 family brought in roughly $6.4 billion in its first year on the market.
To translate that into devices, we need to divide by the average revenue per Pixel phone. At launch, those devices sold for $799 (the entry-level Pixel 3) to well over $1000 (a fully loaded 3 XL). Over the course of the year, Google dropped those prices by as much as $300 and, significantly, introduced the Pixel 3a at a starting price of $399 in May of 2019. If we take a conservative average selling price of $500 per unit, that translates to no more than 12.8 million devices.
As I noted, every one of those assumptions is probably at the high end of what it truly should be. If you assume that hardware revenue is 20% of Google Other Revenue and the average selling price was $550, for example, than overall sales were approximately 8.9 million.
Those results are in line with what Alphabet CFO Ruth Porat said on the company’s Q1 earnings call, when acknowledging lower year-over-year sales for Pixel 3 devices. And it’s worth noting that there was no mention of the Pixel line at all in the 2019 Q3 earnings report or on the earnings call with analysts.
That doesn’t bode well for the Pixel line for the coming year. The Pixel 3, after all, earned rave reviews, especially for its camera. By contrast, the new Pixel 4, which is more expensive than its predecessor, has been dinged in reviews, especially for its “terrible battery life and disappointing camera.” And that’s not even considering an embarrassing failure in its Face Unlock technology.
All told, those disappointing sales results underscore how difficult it is for Google, whose business is built on advertising dollars, to diversify its revenue base. But let’s check back in at this time next year to see if Alphabet/Google has been able to figure out how to win over more buyers.
- My $1,000 mistake: Here’s why I’m returning the Pixel 4 XL to Google
- Google Pixel 4 XL review: A perfectly disappointing phone
- Google Pixel 3A XL review: Google raises the bar for mid-tier phones
- Google Pixel 4 review: Solid camera, but poor battery and cellular performance kill it for business
Source Article from https://www.zdnet.com/article/pixel-3-by-the-numbers-googles-flagship-phone-was-a-flop/#ftag=RSSbaffb68
Pixel 3 sales by the numbers: Google’s flagship phone was a flop
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