In 2016, Google’s newly appointed hardware chief, Rick Osterloh, stood on a stage in San Francisco and unveiled a product that many people in the industry never thought would come: a Google-branded phone.
For years, a “GPhone” to compete with the iPhone had been a mythic prospect — a device that Android fanboys believed could properly take on Apple’s smartphone. The Pixel, with its premium build and high-end price tag, seemed primed to contend. It was glossy and chic, even drawing comparisons to the iPhone’s appearance. It had a remarkable camera with advanced photography software. But it entered a market already dominated by the likes of Apple and Samsung, two of the most popular phone makers in the world.
On Wednesday, Google introduced its fifth generation phone, the $699 (£599, AU$999), and things are more competitive than ever. Apple is even more entrenched in the premium market, and Chinese phone makers have made a huge dent in sales globally even as Samsung maintains a marquee position in the market.
Add to this mix an economy that’s descended into a recession driven by. Millions of people are losing their jobs and looking to save money, and a premium Android phone may not be high on their priority list. Google seems to get this with its latest offering.
“What the world doesn’t need right now is another $1,000 phone,” Osterloh told reporters Wednesday. “It certainly feels like the right thing for the moment.”
But even before the COVID-19 crisis, sales for Google’s pricey phones had been lackluster for years — a surprising result considering Google emulates Apple’s model of marrying the hardware and software experiences. Google executives have blamed the slump on fierce competition in the premium phone market. Google sold 7.2 million Pixel phones last year, according to IDC. It’s the company’s highest amount ever, but it’s not even close to getting Google on the Top 10 list for smartphone vendors.
The issue isn’t quality. Google’s phones typically get high marks from reviewers every year. But the search giant hasn’t been able to convince consumers to go with Pixel, with an exclusivity deal with Verizon hobbling access in the US market in the early years (both the Pixel 5 andare available on all carriers).
Google has continued to struggle even as other companies have challenged Apple’s and Samsung’s supremacy in according to IDC. Other upstarts, such as China’s OnePlus, have seen better success in the premium smartphone market.. The Chinese company Huawei is now the world’s leading smartphone manufacturer, with a 20.2% share of the market,
Though Pixel devices may showcase the abilities of Google’s software and hardware, like the company’s Lens image search or radar gesture controls, those things are of little comfort when it comes to the market, said Ross Rubin, principal analyst at Reticle Research. “These aren’t concept products,” he said. “They’re products that need to be sold.”
The Pixel 5 leaves off the radar gesture controls and face unlock, partly because Google wanted to make the phone more affordable, Osterloh said. The device costs $100 less than last year’s Pixel 4.
Google’s smartphone fortunes are done no favors by the reported turmoil in the company’s smartphone division. Osterloh reportedly criticized product decisions made during development of the Pixel 4. Mario Queiroz, the former head of the Pixel division, departed the company earlier this year, after leaving the smartphone team last year. Marc Levoy, who built Google’s smartphone software into a leader in mobile photography, left in March.
Levoy, who now works at Adobe, is known as a trailblazer in “computational photography,” which relies on software to improve images. He pioneered several camera features for Pixel, leading Google’s research team in creating Portrait Mode, which glams up smartphone photos to make them look professionally done, and Night Sight, for brightening up pictures in low light. Many of the features he built for the search giant have ended up on competing devices, like the iPhone.
The answer for Google may be outside the premium market and innovative bells and whistles. The challenge of selling its high-end phones led Google to create its midtier line last year. The Pixel 3A helped lift Google’s smartphone business but was discontinued in July. The $349 (£349, AU$599) Pixel 4A shows promise, especially with its(£499, AU$799) released Wednesday, a great value for a phone with that kind of next-gen cellular connectivity. The success of the midtier line may’ve played into the lower price of the premium Pixel 5.
That may have some Google fanboys waxing nostalgic for the company’s original smartphone strategy.
A return to the old days?
A major turning point for Google’s hardware operation came four years ago, when the company tapped Osterloh, the former president of Motorola, to lead a dedicated team focused on creating consumer devices. A year later, Google paid $1 billion to bulk up its hardware engineering ranks through a deal with Taiwanese manufacturer HTC.
This marked a dramatic shift from Google’s previous approach, where the closest thing to a “GPhone” was something from its Nexus program. That was a beloved but niche line of phones that ran “stock” Android — a bare-bones version of Google’s mobile operating system without the flourishes or extra apps that carriers and manufacturers usually add to the software. Each year, Google worked with a different hardware partner, including LG, Huawei and HTC, to put out the phones.
The goal wasn’t necessarily to become a market leader or make money. It was to be a showcase for Google software or to demonstrate to other hardware makers what their devices could look like.
But there were a few phones in the Nexus program that hit the sweet spot of price and quality. The Nexus 4, made by LG, was particularly accessible at $299 when it debuted in 2012. A year later, the Nexus 5, an especially beloved model among Android fans, sold for $349 — the same price as the Pixel 4A.
Google’s midtier line seems like a return to that old Nexus model. The company even priced the Pixel 4A $50 cheaper than last year’s 3A, suggesting that the company is willing to be even more aggressive in its pricing than before.
“Over the past few years, the mission of the Google Pixel group has shifted,” said Rubin. “It’s very challenging in [the premium] segment, particularly during a recession.”
This would be a far cry from Google’s grand hopes with the first Pixel, but perhaps the next best thing.