Alphabet – Google's parent company – had its Q1 earnings yesterday, amid its lowest growth in 3 years. A 17% increase in annual revenue has some worried investors and Google CEO Sundar Pichai has had to answer some difficult questions about the company's hardware outlook. One analyst even compared Pixel phones with Microsoft's unsuccessful line of smartphones.
According to Ruth Porat's CFO, "recent pressures on the premium smartphone market" accounted for smaller-than-expected sales of Pixel. It was not specific but we can assume that it means more competition and less interest from consumers who are happy to save good money and keep the phone longer. It may also have something to do with the big focus on the Pixel 3 XL and considerable sizes in the smaller model, at a time when other companies are creating more creative and attractive designs that cost much less.
Pichai also criticized Google's hardware for not representing significant revenue from ads – especially as ads slow down. One analyst even asked if we had another Microsoft in hand (!). (Pichai was defensive, said that Google is committed in the long run, but eek.) Https://t.co/4qTGvfOqHM
– Ingrid (@ingridlunden) April 29, 2019
Despite Pixel's weak sales, Google's hardware division is producing revenue growth – $ 5.5 billion in the first quarter of 2019 – but will need to do even better to convince analysts and investors that it has the potential to be a consistent with declining ad revenue.
Pichai insisted that Google is present for the long term and announcing the Pixel 3rd and 3rd XL next month will represent the next phase of the long-term strategy. If you can not sell high-end phones, maybe mid-range variants with the same camera technology and a headset will do the trick. We could also see the newly leaked Nest Hub Max make an appearance on the I / O as part of the company's wider hardware plans for 2019.