There is a good reason why Pixel sales more than doubled during the second quarter

There is a good reason why Pixel sales more than doubled during the second quarter
Google parent Alphabet released its second-quarter earnings for 2019 this afternoon. During the conference call held after the numbers were announced, Google CEO Sundar Pichai pointed out that "overall Pixel unit sales in Q2 grew more than 2x year over year." At first blush, that sounds like absolutely fabulous news, especially when the first quarter numbers for the phones weren't good. You might recall that nearly three months ago, Alphabet CFO Ruth Porat indicated that Pixel sales declined on an annual basis during the first three months of this year.

But once you realize that the mid-range Google Pixel 3a and Pixel 3a XL were released in May during the second quarter, well that certainly would give you an explanation for such a surge in unit sales. Even if the mid-sized Pixels garnered tepid demand-which wasn't the case at all-Google would have reported an increase in Pixel sales from the same quarter in 2018 when no new Pixel handsets were launched. As it turned out, the mid-range Pixels were a hit with consumers looking to pick up a great smartphone camera at a more affordable price. The Pixel 3a and Pixel 3a XL cost $399 and $479 respectively and several deals have appeared during the 10 weeks that the phones have been available. The devices are accounted for in Google's "Other" category and revenue in that sector rose from $4.43 billion a year ago to $6.18 billion this year, a 40% gain.

Google faces an antitrust investigation by the Department of Justice

The company is currently prepping the Pixel 4 line, which could feature Google's Project Soli technology. This is a radar-based system that tracks the minute movements of the hands and would allow Pixel users to control the handset through the use of subtle hand gestures. Google has already released an actual photo showing part of the device's rear panel even though the new models aren't expected to be unveiled until October.

Google generated revenue of $38.8 billion during Q2, up 19.3% year-over-year. Operating profits rose 16% on an annual basis to $10.4 billion. The company spent $3.62 billion to acquire traffic during the three month period, up from the $3.47 billion it shelled out during Q2 2018. As a percentage of Google's advertising revenue, these costs actually declined to 22% from 23% during the same period a year ago, good news for the company. Paid clicks on Google sites rose 28% year-over-year, but growth slowed to 6% compared to this year's first quarter. CFO Porat noted that YouTube had strong revenue growth. "YouTube was again the second largest contributor of revenue growth, and [we’re] really pleased with the ongoing momentum that we’re seeing here," the executive said. A decline in Google's overall growth rate last quarter was blamed on YouTube, but it appears as though the streaming video site was able to turn things around during the three months from April through June.

With a 90% share of the online search market, Google has become an easy target for those who complain that Big Tech has become too big. Amid talk from lawmakers on both sides of the aisle that companies like Google and Facebook should be broken up, the U.S. Department of Justice announced that it plans to investigate several tech firms, including Google, for possible antitrust violations. .

The second-quarter earnings report seemed to cheer investors. After the 4 pm EDT close of the U.S. markets, Alphabet shares (GOOG-NASDAQ) soared $93.67 or 8.3% to $1,225.79.

Related phones

Pixel 3a
  • Display 5.6" 1080 x 2220 pixels
  • Camera 12.2 MP / 8 MP front
  • Processor Qualcomm Snapdragon 670, Octa-core, 2000 MHz
  • Storage 64GB
  • Battery 3000 mAh
Pixel 3a XL
  • Display 6.0" 1080 x 2160 pixels
  • Camera 12.2 MP / 8 MP front
  • Processor Qualcomm Snapdragon 670, Octa-core, 2000 MHz
  • Storage 64GB
  • Battery 3700 mAh



1. Vancetastic

Posts: 1887; Member since: May 17, 2017

A good phone for a good price...unbelievable!

2. lyndon420

Posts: 6918; Member since: Jul 11, 2012

I don't get this...break them up (Google & Facebook) into something else....? Like what exactly??? People will continue to use Google & Facebook the same way they are now. If you think they are getting 'too big', then you need to get people to use something other than Google for searching the internet, and use something other than Facebook for social media addictions.

4. jellmoo

Posts: 2678; Member since: Oct 31, 2011

Well take a simplified look at Google. It's the dominant player in search, video and mobile OS. They use their dominance in these three areas to keep their services up at the expense of others (having to use Google as the default search on Android, and having Youtube installed on Android phones by default, for example). Now imagine if these things were broken up into their own companies. No longer would the other services necessarily get preferential treatment over the competition. Perhaps Android would sell the default search option to the top bidder. Perhaps they would have Vimeo installed on their devices. The way we use the services wouldn't change over night, but there would be companies now competing for the prime spots, potentially to the benefit of consumers.

5. lyndon420

Posts: 6918; Member since: Jul 11, 2012

Google for search... YouTube for video content... Android for most popular OS... Facebook for social media junkies - all these things are pretty much synonymous now. The majority of the planet knows about these services, and people will still flock to these services whether or not they are pre-installed on our phones.

7. jellmoo

Posts: 2678; Member since: Oct 31, 2011

For a while, sure. But the way we consume content and use services is changing and changing fast. There's an awful lot of people that aren't tech savvy that will get a new phone and click on "Search" to look for things having zero idea what the default search engine is, say, Bing. Or go with "Videos" to see funny cat videos that are on Vimeo. And if they aren't being dictated at the OS level, maybe the manufacturer is choosing to sell it to the highest bidder. Samsung might use Yahoo, Oneplus might use Bing and Motorola might use DuckDuckGo. If I want to send a message to somebody I might use Facebook Messenger or Whatsapp. Now, it doesn't terribly matter, but it might if they are separate companies. Of will I share a picture I just took on Facebook or on Instagram?

3. iczer

Posts: 160; Member since: Oct 14, 2015

10 billion Profit!

6. wilky

Posts: 39; Member since: Jun 30, 2014

Google want to make a steady profit on it's phone's then it needs to ditch the Premium Market, leave that to the likes of Apple,Samsung ect. Google could easily dominate the mid-range market with a phone under $500 as that is where most people these days look when wanting a new smartphone either on contract or buying outright.

9. mootu

Posts: 1541; Member since: Mar 16, 2017

They have a phone under $500 and they are not dominating anything. Outside of the US they barely get a second look, the competition from China is way too strong.

11. meanestgenius

Posts: 22840; Member since: May 28, 2014

Agreed. Google would have to not only build a much better presence outside of the U.S., but they would also have to make a phone as competitive as those coming out of China.

14. TBomb

Posts: 1714; Member since: Dec 28, 2012

I think they barely get a second look because everyone has basically chosen their brand. I mean, just look at here: 90% of us have a preferred OS, and then 99% of that group has a preferred brand within that OS (when applicable). I think the marketshares are only going to change when the industry needs a huge change. Something needs to cause iOS users to want to switch to Android for iOS users to do it. Pixel needs something to happen to grab marketshare from Samsung. Whether that something is a PR nightmare (like all of the United issues we saw in 2018), a completely revolutionary product, a deal that can't be given up by anyone, or something else is yet to be determined. However, people stick with what they know. Even if it costs an extra $100 compared to the alternatives because they are familiar and comfortable where they are.

16. Venom

Posts: 3999; Member since: Dec 14, 2017

I disagree. Google is making phones that are as competitive as the ones that are coming out of China. The view is much better and pure on the Pixel than what some people think.

21. meanestgenius

Posts: 22840; Member since: May 28, 2014

Again, Pixels small to nonexistent presence outside the U.S. and lack of competive features vs the Chinese brands smartphones is a detriment to them, which the picture for them not so Pixel perfect, despite what some may think.

23. Venom

Posts: 3999; Member since: Dec 14, 2017

Again some people are just speaking purely on hyperbole instead of facts because they are upset that the Pixel phones are gaining more traction because of the 3A fulfilling a niche that the Nexus phones used to fill. Most of those Chinese phones can't even exist without copying others because they lack any originality like Huawei. Only One Plus manages to be anything worthwhile and they are still one of the best.

17. Venom

Posts: 3999; Member since: Dec 14, 2017

Google hit the mark with the Pixel 3A XL and the 3A phones hitting the sweet spot the Nexus phones of old used to hit.

8. Cat97

Posts: 2029; Member since: Mar 02, 2017

The reason is huge discounts to unsold devices.

15. TBomb

Posts: 1714; Member since: Dec 28, 2012

Can't be it. The growth was in $$$ not in unit sales. "Huge discounts" means you have to sell "extra units" to make the same amount of money. Money grew which means if it was because of "huge discounts" they would have to sell even more "extra units" which, in turn would give them more market share. And that is something that Google would have been very vocal about if it were true.

10. Vogue1985 unregistered

Heavy marketing,paying tons of influencers etc.i remember for almost a month every ad on youtube and google owned apps and had info on the 3a.

13. WirelessSales unregistered

A gaping hole in your "Good reason why..." is that the Google Pixel was exclusively sold at Verizon until Q2 when, quite abruptly, it was released to TMobile, AT&T, and Sprint. Seems like you buried the lede.

18. Venom

Posts: 3999; Member since: Dec 14, 2017

Looks like a few haters, trolls, wannabe tech enthusiasts, and fake intelligent people were wrong. The Pixel 3A may not offer every bell and whistle others offer, but what it offers is a compelling smartphone experience with the best camera of any phone and guaranteed updates. The best phone ever.

19. inFla

Posts: 222; Member since: Aug 17, 2018

With the same biased reviews and media hype even the Essential PH1 would have sold well.

20. meanestgenius

Posts: 22840; Member since: May 28, 2014

Exactly. Totally agree. Pixels (with the exception of the camera, which aren’t the best) are all hype and no substance.

22. Venom

Posts: 3999; Member since: Dec 14, 2017

Too bad credible reviews and YouTube creators have said otherwise compared to some shill in the comments section of PA.

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