Google’s Pixel will sell 5-6 million


Pixel-announcement-840x469Fortune tellers at financial outfit Morgan Stanley have been shuffling their tarot decks and predict that around 5-6 million of Pixel and Pixel XL will be sold this year.

This will make about $3.8 billion in revenue. Similarly, Morgan Stanley projects that the Pixel will sell three million units in the final three months of 2016, racking up about $2 billion of revenue.

The Morgan Stanley note estimates the Pixel will be half as profitable for Google as the iPhone is to Apple,  because it has better and more expensive materials.

The Pixel phone will generate a 22 per cent -25 per cent gross profit margin, the note says, varying according to the model. For perspective, the iPhone 7’s gross margin is at around 41 per cent, but this has notably declined from 57.7 per cent in 2009.

But Google will profit from the Pixel beyond sales of the phone itself, the note says, through what Morgan Stanley’s analysts refer to as “Android user monetisation.”

People spend three times more money on iOS shopping apps than they do Android ones, but some of the Pixel’s features will help close this gap, Morgan Stanley said.

Features unique to the Pixel, such as the Google Assistant, the Pixel camera, and Daydream (Google’s virtual reality headset, which works with the Pixel), plus the smartphone’s deeper app integration, increased prominence of Android Pay, and improved computing power (compared to other Android devices), will ultimately lead to users spending more money on Android, according to the research note.

Morgan Stanley’s analysts predict that these features could see the Pixel driving higher mobile search monetization for Google as advertisers will spend more to reach the consumers who spend the most on their mobiles.