Wall Street wizards bullish on Google's Pixel phones.
According to Business Insider, Morgan Stanley analysts think the Pixel and Pixel XL are going to be really good for Alphabet's bottom line.
To be clear, the Pixel isn't going to sell nearly as many phones as Samsung or Apple, but the finance wizards say Google is on track to sell three million phones in the rest of 2016 to generate about $2 billion for the company and five to six million in 2017 which bring in about 3.8 billion (with a b) in revenue for 2017. While Google has a lower profit margin per item (about 24%) than Apple (about 41%), these higher than expected sales numbers will translate into some serious folding cash.
The Pixel phone will generate a 22%-25% gross profit margin, varying according to the model. For perspective, the iPhone 7's gross margin is at around 41%, but this has notably declined from 57.7% in 2009.
Morgan Stanley also thinks that the sales of the Pixel will mean a lot more than just the initial profit. Features like Google Assistant, Daydream and better app integration with Google itself will translate into users spending more money with their Android phones and driving higher mobile search revenue. Currently, users with iPhones spend three times more when using shopping apps than Android users. The bank's analysts believe the Pixel will close this gap, and that advertisers will pay more because of it.
We're not bank analysts here at Android Central, but we have to agree that the Pixel is a changing point for Google and Android. We're not yet sure how things will play out, but with numbers like this, we're certain that Google is already working on what comes next for the Pixel line.
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