We’ve talked about it many times before, but Google’s Pixel is more than just a device that competes with flagship devices in the specs department. The devices are also priced in line with what you’d expect from, say, a Galaxy S or an iPhone, and Google plans on shipping millions of these things over the next year.
It doesn’t take much to put together that premium priced smartphones that are shipping in high volumes are going to be good for a company’s bottom line, and that’s exactly what Google is anticipating. Reports estimate that Google will ship around 2 million in the last three months of 2016 and a total of 5 to 6 million next year, generating about $4 billion in revenue. It’s not quite as aggressively high as Apple’s iPhone, the golden standard of profit margins, but it’s pretty good for Google’s first device in a brand new line.
But while Google is maintaining a roughly 25% profit margin on the Pixel phones, the big money comes from user monetization and users buying into the Android ecosystem. Apple tends to hold an advantage over all Android phones because users tend to spend more money, but a device like the Pixel is built to counter that. It’s a premium device that’s trying to offer a premium ecosystem with extra services alongside it, including things like Daydream VR and Google Home. Customers are much more likely to buy apps or a YouTube Red subscription if they’re deeply invested in Google’s platform, and those customers are more likely to continue spending money over time. It’s about the long term, and Google knows that.
source: Business Insider