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May 14, 2019

Google’s Pixel offering looks to shake up mid-priced smartphone market

By GlobalData Technology

During its annual developer’s conference, Google I/O, Google unveiled its Pixel smartphones, which retail for about half of its premium Pixel 3 smartphones. The search engine giant is meeting the demand for cheaper smartphones while retaining some key higher-end features in the process.

Smartphones 2019

Google announced a cheaper version of its flagship Pixel 3 and 3XL and expanded distribution in the US, two moves that will shake up the market for mid-priced smartphones.

Google has introduced the Pixel 3a and 3a XL, priced at $399 and $479 respectively. The phones offer lower specs and hardware, such as plastic rather than glass, while holding on to some attractive features such as the high-end camera that the Pixel line is known for: Night Sight, Super Res Zoom and portrait mode on both the rear- and front-facing cameras.

Google is also rolling out software features that are unique to the mid-range smartphone market, such as call screening, which allows Google Assistant, an artificial intelligence function, to answer a call and speak to an unknown caller to ensure that spam is avoided.

In the US, Google is expanding its carrier distribution for some of its Pixel phones beyond Verizon. Pixel 3a and Pixel 3 are now available through more carriers, including Verizon, T-Mobile, Sprint, US Cellular, Spectrum Mobile (Charter), C Spire and Google Fi. Internationally, Google’s previous distribution partners will carry the phones.

Google has quickly responded to a market where demand for premium smartphones has slowed. Apple and Samsung are feeling the pinch as has Google. In its most recent earnings report, Google’s parent, Alphabet, indicated sales of its flagship Pixel phones were falling. Similarly, Apple reported during its second-quarter earnings release last week that iPhone sales fell 17% year-over-year to $31 billion after slow demand carried over from 2018.

Historically, Google’s hardware strategy has been about furthering its AI ambitions, but it has long needed a larger installed base of Pixel phones to move this strategy along. Google Assistant, while available on Android smartphones, is a better-integrated experience on all Pixel phones.

Offering solid mid-range phones through more US carriers should significantly increase sales. But Google needs to back up these products with some aggressive marketing to highlight what is truly innovative about their offering.

The competitive threat is now higher for Samsung than Apple, whose users are locked into the iOS ecosystem. Chinese vendors trying to get a foothold in the US market also now face stronger competition.

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