- Sales of the Google-made Pixel smartphone are declining, company executives said in its first-quarter results conference call Monday – pointing even more to the tech giant's struggle to build a meaningful hardware business.
- Google CEO Sundar Pichai said Pixel's sales were caused by "year-on-year downturns" in the smartphone industry.
- CFO Ruth Porat said that Pixel's struggles are part of why growth is slowing in Google's "other revenue" drive – which includes companies such as cloud and hardware that are out of their top ad business.
- Google's "other revenue" growth slowed from an increase of 35% year on year in 2018 to 25% in 2019.
- Alphabet shares fell more than 7 percent on Monday's trading session on Monday.
- Visit the Business Insider homepage for more stories.
Sales of the Google-made Pixel smartphone are declining, company executives said in its first-quarter earnings conference call on Monday, further pointing to the technology giant's struggle to build a significant hardware business.
While Google is typically closed around these metrics, CFO Ruth Porat has shed light on Pixel's difficulties in explaining its slow year-on-year growth for "other revenues" – which include revenue channels such as cloud and hardware, which are out of your core business.
"Hardware results reflect smaller Pixel sales year-over-year, reflecting in part the intense promotional activity across the industry due to recent pressures in the premium smartphone market, Porat said.
Google's "other revenue" growth slowed from a 35 percent increase in 2018 to 25 percent in 2019. Technology giant Alphabet saw its shares fall above 7 percent in Monday's trading session on Monday.
Google CEO Sundar Pichai also commented on Pixel's sales.
"Phones definitely throughout the industry, I think we are working at a stage where there are unfavorable winds year-by-year," said Pichai, never explaining what these "contrary winds" really imply. "But I think, especially since the ecosystem is constantly advancing, I remain excited about the speed of innovation."
The chief executive pointed to the rise of the ultra-fast 5G wireless standard and the deployment of the first folding phones – which he says "Android plays an important role in driving" – as smartphone developments that excite him the most.
Recently, Samsung – the first major smartphone maker to launch a foldable smartphone – was forced to postpone the release date of its handset after the first reviewers discovered major hardware failures.
See More Information: Samsung's $ 2,000 folding cell phone is a disaster for the smartphone giant – that's what happened
Regarding Google's future smartphone plans, rumors have been that a cheaper version of Pixel – probably called Pixel "3a" – will be released in early May.
"We are still in our early days, but our commitment is very strong," said Pichai about Google's hardware business.
The Future of Hardware for Google
Despite Picahi's optimism, there are still doubts about the future of Google's hardware business.
Business Insider recently reported that the company had reduced the size of its laptop and tablet departments – a measure that a source says would "reduce the portfolio" of products launched by the technology giant.
The company's smartphone group was not included in the "roadmap cuts" that the Business Insider reported, though Monday's earnings report shows that the search giant is still having trouble in that area.
Still, while Pixel has slowed sales, Pichai has reinforced Google's initial rationale for building its own internal hardware – to ensure that its "services are presented to users the way they should be," Pichai said.
Only time will tell if and when Google can really turn your hardware efforts into a real and sustainable hardware business.
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