The less expensive Pixel 3A helped Google sell twice as many smartphones last quarter

From The Verge: Google’s budget-conscious approach to its Pixel smartphone line appears to be paying off. Google parent company Alphabet posted second quarter earnings for 2019 today, handily beating Wall Street expectations with revenue of $38.9 billion and a profit of $9.9 billion. The profit dwarfs that of the second quarter of 2018, when Google had to dock its net income by a record $5 billion over last year’s antitrust settlement.

The Google ad machine continues to chug along unfazed by any of the company’s numerous scandals surrounding botched YouTube moderation, alleged bias in search results, and looming regulatory threats. (Google’s ad business made $32.6 billion this past quarter, a jump of nearly 20 percent.) But the real spotlight this quarter is on the “Other Revenues” segment. That segment includes the company’s hardware business, like Pixel phones and Google Home smart speakers, as well as its cloud computing division. It was up nearly 40 percent from this time a year ago, to $6.2 billion.

One of the reasons: Google’s less expensive Pixel 3A phone, released in May. “With the launch of Pixel 3A in May, overall Pixel unit sales in Q2 grew more than two times year over year,” Google CEO Sundar Pichai said on an earnings call this evening. Google has never broken out concrete Pixel sales before, so we don’t exactly know how many more units this increase involves. But we do know that Google has had a lot of trouble selling the Pixel 3, even to the point of the company mentioning the struggles in its last quarterly earnings call. The Pixel 3A, which launched on three times as many carriers as the Pixel 2 or 3, is half the price of the Pixel 3, and launched at a time with little to no other major product launches to compete with, certainly should have sold more than the prior Pixel models. Doubling prior sales doesn’t seem all that significant in light of those conditions.

Additionally, Google doesn’t separate out its Other Revenues segment into different categories. So we can’t say for sure whether the 40 percent jump is mostly attributable to those extra Pixel sales, or how much it was helped along by the cloud computing business. But it’s fair to say that both are likely contributing significantly.

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