Pixel 3/3 XL Smartphone — More About Software Than Hardware

Counterpoint
counterpoint
Published in
3 min readOct 9, 2018

Google launched its all-new Pixel 3/Pixel 3 XL smartphones today. The previous two Pixel models were not able to capture significant market share (<1%) globally, but it grabbed a lot of attention from the market. Previous Pixel models were known for their camera quality and the software prowess of Google’s apps and services including, Google Lens, Google Assistant, unlimited cloud storage etc.

  • Pixel sales were driven by the US — a market that contributed to a third of the total global smartphone segment above 600 USD price points in Q2 2018, and almost two-thirds of Pixel sales in 2Q18.
  • In an operator-driven market like the US, Google only partnered with Verizon, while the devices are also available with Project Fi and in open channels. Pixel sales in US can be higher if it were made available through more carrier channels.
  • For Pixel 3/Pixel 3 XL, we expect sales to be stronger than the predecessor models, as they will be launched in four new markets this year.
  • Pixel 3/Pixel 3 XL is expected to have higher camera performance with an improved visual core SoC. Google is unusual in eschewing the dual or even triple main camera modules, now almost universal in premium Android smartphones. It is instead opting for a single camera setup with advanced, AI-mediated graphical processing.
  • Even though the higher internal memory configuration is missing from the Pixel line-up, the unlimited cloud storage option will more than compensate. We have also seen consumers opting for lower ROM, and therefore cheaper, iPhone models and then relying on cloud storage.
  • With Apple pushing iPhone ASPs higher for the new iPhone XS series, consumers will be looking for more choices in the premium segment. Android OEMs, including Google, have more pricing headroom at the high-end; we are already seeing Chinese players introducing flagship models and positioning them at higher price points than previous flagship models. But despite the price increases, Android flagships are significantly cheaper than the comparable iPhone models.
  • Pixel 3 is priced higher than its predecessor model. But at 799 USD with 6-month YouTube Premium and unlimited cloud storage, it is better value than the Apple iPhone XS that starts at 999 USD. This could further translate into higher sales for the Pixel devices — though we don’t see huge migration from iOS to Android among consumers.
  • Project Fi is offering a 799 USD service credit when buying two Pixel 3 at 799 USD each. Considering its 20 USD plan and 2GB of data usage per month, the service will effectively be free for almost a year for both devices.

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Counterpoint
counterpoint

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