Why Google Is Going High-End With Pixel

By Anshel Sag, Patrick Moorhead - October 6, 2016
Many of Google’s strongest proponents have been Nexus customers ever since the Nexus 4. Many of them don’t remember the days of the Nexus One, Google’s first Nexus device and also one of its most expensive. That product line eventually started to stand for two things: stock Android experience which includes the fastest updates and affordable performance. The Nexus 4, Nexus 5 and Nexus 5X delivered on this promise. I believe that the Nexus program’s goal was to push Android manufacturers to make devices that were affordable but still delivered a great value and level of performance. I believe that if you look at the market today, there is a pretty good selection of these devices available globally and that Google has accomplished its goal. This is why I believe Google has transitioned away from Nexus and towards Pixel. Google is likely bringing up the Pixel program to accomplish phase two of its hardware plans. Google wants to help elevate the quality of high-end Android devices by guiding its customers in a similar direction to what it did with the Nexus devices. However, this time Google wants its partners to become more competitive, because they need to become more profitable. After all, most of the profits in the mobile sector right now are being made by Apple with the only Android maker making any significant money being Samsung Electronics. Google does not want to be so heavily dependent on Samsung for the success of Android, because Samsung could become too powerful of a vendor. The Android ecosystem works best when there are many competitive players competing against one another. phone_hero-module_hero-image_1440_2x (Source: Google) By making the other Android smartphone manufacturers more competitive, Google is also trying to increase its partners’ ability to turn a profit. The ability to turn a profit for Google’s partners is extremely important, because it determines whether or not they can survive. By having more partners that are able to survive long term due to selling high-end devices with bigger margins, Google is able to maintain a more diverse ecosystem and grow the overall Android user base to serve ads to, which is how Google makes money. This is why the Pixel has the highest Dx0 camera score of any phone ever tested, or why the Pixel is running on an extremely new Qualcomm Snapdragon 821 chip, something Google has never really gone out of its way to do. Additionally, there is a short-term VR angle to Google’s Pixel aspirations. I believe that Google is releasing the Pixel to establish a bar for what is to be expected from Daydream-capable devices. More specifically, Google wants its partners to build flagship devices that are good enough that people actually want to buy them. By enabling these partner high-end devices to be Daydream compatible, Google is helping its partners grow the Daydream ecosystem without diluting the performance or experience. This in turn makes Daydream more attractive to developers and brings Daydream and VR as a whole closer to the mainstream with a VR capable device and a $79 headset. Google has a long road ahead of it with Google Pixel and Google Daydream, but the company has made it abundantly clear that it is in this for the long haul. I understand that approach, because this first Pixel phone will very likely not be as successful as the previous Nexus phones. Many of the Android faithful simply aren’t the kinds of customers that are interested in such a device, yet. They grew to accustomed to a certain Google and they’re currently suffering from sticker shock. Sure, some of them see the value in the unlimited full resolution Google Photos storage and free Daydream headset, but $649 is still a lot for the cheapest Google phone to many Android fans. Google will need to spend heavily on marketing and education to make sure that consumers understand that this isn’t the same Google.
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Anshel Sag is Moor Insights & Strategy’s in-house millennial with over 15 years of experience in the IT industry. Anshel has had extensive experience working with consumers and enterprises while interfacing with both B2B and B2C relationships, gaining empathy and understanding of what users really want. Some of his earliest experience goes back as far as his childhood when he started PC gaming at the ripe of old age of 5 while building his first PC at 11 and learning his first programming languages at 13.

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.