Alphabet (GOOG 0.06%) (GOOGL -0.01%) is dead set on growing its hardware business. Not only did the company recently acquire HTC's smartphone engineering team in a $1.1 billion deal, the search giant is also reintegrating Nest back into Google in order to accelerate its smart-home product road map. And the Pixel 2 that was released last year was a strong follow-up to the original Pixel released in 2016.
Google does not directly disclose unit volumes, but IDC Research Director Francisco Jeronimo estimates that the company shipped 3.9 million units in 2017.
#GooglePixel shipments continue to grow, but they still represent a tiny portion of the smartphone market pic.twitter.com/W6FVZlYOlC
— Francisco Jeronimo (@fjeronimo) Feb. 12, 2018
3.9 million and counting
That total is twice as many units as Google shipped in 2016, but keep in mind that the first-generation Pixel was launched in late 2016, so it was only available for a few months that year. For that reason, comparing 2017 to 2016 isn't all that meaningful. That being said, shipping 3.9 million units (including first-generation and second-generation models) is still a solid accomplishment for Google. Even though Google's market share of the global smartphone market is a rounding error, the trend is still encouraging and Google is clearly just getting started.
Pixel 2 and Pixel 2 XL. Image source: Google.
The total is also much better than the 88,000 units that Jeronimo estimates that Essential shipped in its first six months. The Essential PH-1 was a highly anticipated new flagship smartphone from the creator of Android, Andy Rubin. Essential had raised $300 million in funding last August at a $1.2 billion valuation -- before PH-1 actually shipped.
. @Arubin's @essential smartphone is still a long way from becoming a successful venture. In 2017, it shipped less than 90K units (first six months after launch) pic.twitter.com/NHVlA2Gjzr
— Francisco Jeronimo (@fjeronimo) February 12, 2018
The first-generation Pixel starts at $549 after getting a price reduction following the launch of Pixel 2, and Pixel 2 XL tops out at $949. After taking into account volume and wholesale discounts to channel partners and acknowledging the fact that Pixel 2 XL simply isn't competitive at that premium price point (Apple's iPhone X is just $50 more), a hypothetical average selling price (ASP) of approximately $600 sounds reasonable, which would translate into about $2.3 billion in Pixel revenue last year.
In late 2016, Morgan Stanley had been modeling for Pixel to bring in $3.8 billion in revenue in 2017 after shipping 5 million to 6 million units.
