Google’s premium smartphone, the Pixel, is pushing Alphabet’s earnings higher based on recently reported data.
Alphabet, Google’s parent company, just released their 4th quarter earnings and as usual advertising drove the most revenue with $22.4 billion which was a 17.4% increase from the previous quarter. However, the big surprise came when they announced that the companies other bets including hardware, Play Store and cloud business jumped a whopping 62% to $3.4 billion. “We see tremendous potential ahead for these businesses, as well as in the continued development of non-advertising revenue streams for YouTube,” Alphabet Chief Financial Officer Ruth Porat pointing out. The most interesting aspect of this is the hardware piece which included the Pixel and Google Home which Google released in the fourth quarter.
With Google’s heavy push into the hardware business it’s clear that they are purposefully pushing their company into other areas in order the increase Alphabet’s earnings. They understand that advertising is their bread and butter but there are many challenges and new competitors like Facebook that are stealing market share. According to these numbers and reports that the Pixel and Google Home both sold about 500,000 units each last quarter points to a huge win. While those numbers pale in comparison to other hardware companies like Apple and Samsung, it is a good start for a company that has always relied on 3rd party manufactures to push their software platforms like Android. The Pixel in particular is especially promising based on the positive user reviews and sales numbers.
“We are thrilled with the reception. We are committed to this for the long-term as a way to bring a great, seamless Google experience to people. The early signs are promising and you can expect to see us expand our offerings thoughtfully,” Google CEO Sundar Pichai said of the Pixel and Google Home as these numbers were reported. This is great news and we do hope to see other iterations of both devices soon.