Google/smartphones: price, not AI, will lift Pixel’s market share

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Google’s domination of search does not extend to smartphones. It has yet to break into the top 10 best sellers, lagging behind Apple, Samsung and Xiaomi. In the second quarter of the year it shipped 1.6mn Pixel devices, according to data from analysts at Omdia. This was less than 1 per cent of the global total. 

But despite poor marketing and a slow start, the Pixel’s popularity is on the rise. In Japan, for example, it is taking market share from Apple iPhones. Within Google’s parent company Alphabet, a bump in Pixel sales helped the “Other” category generate 11 per cent of total revenues in the past quarter, up from 9 per cent in the same period of last year.

There is a good chance this will continue with the latest Pixel 8. But artificial intelligence-powered features such as face-swapping photo edits would not be able to claim credit for this. Price matters more. The Pixel is a premium phone priced $100 below the latest iPhone with software support that extends its lifespan.

This is not what Google envisaged when it released its first Pixel phone in 2016. The consumer-targeted phones replaced Nexus devices designed to showcase the popular Android operating system. The Pixel’s AI capabilities were supposed to give it an edge.

Chief executive Sundar Pichai declared an evolution from mobile-first to AI-first. Pixel would take user data and develop a completely personalised virtual assistant.

If that sounds familiar, it is because this is the unrealised promise still being made by AI proponents. They do not mention the additional costs that running AI features on handsets create.

Pixel sales remain a tiny fraction of Google’s total revenues. A million more Pixel sales would not make up the difference if sanctions hamper the company’s advertising business. That would be the outcome if the US Department of Justice succeeds in its antitrust case against the search business.

But the combination of sub-iPhone prices and cost-conscious consumers could finally lift Pixel into the smartphone top 10.