- Alphabet Inc. launched their latest Google-branded smartphone, Pixel, this week.
- There have been reports of how the Pixel launch could hurt iPhone sales.
- Does Apple Inc. need to be worried about the Pixel launch?
In what was the biggest launch event in the history of Alphabet Inc. (NASDAQ:GOOGL), the company launched a slew of hardware products which could finally pave the way for the company's hardware aspirations. For those who missed the event, Alphabet Inc. announced a new smartphone branded as "Pixel", a voice activated speaker called "Google Home", Google Wifi, a new chromecast device and the Daydream VR headset. Given the amount of press the 'Pixel' smartphone has launched, it would be fair to conclude that the smartphone was probably the biggest launch. A number of reports have also picked Apple Inc.'s (NASDAQ:AAPL) iPhone as the target of the Google branded Pixel. However, do these claims hold much value?
Will The Pixel Launch Hurt Apple Inc.?
A recent post on The Motley Fool claimed that the Pixel launch will hurt Apple iPhone 7 where it hurts the most. The author picked the Pixel's superior camera performance and the unlimited photo storage, which Google will offer free of cost to Pixel owners. The author stated:
One of the more notable announcements from Alphabet's event to show off the new Google Pixel was the claim that the new phone has the best smartphone camera ever made.
Given the fact that the iPhone segment contributes over 65% of Apple Inc's topline, these are claims which could seriously hurt Apple stock and its investors. Compounding the problem is how much Cupertino cares about the iPhone camera. This is apparent from the fact that Apple misses no chance to market its camera, which was also noticed in the recent iPhone 7 launch event. However, do these claims hold water? This post is in response to the fool article in order to understand the impact of 'Pixel' on Apple Inc. and its iPhone sales.
Should Apple Investors Be Worried?
While it's true that DxOMARK, a third party image processing company, has rated the camera on the Pixel smartphone as the best ever, this isn't the first time a smartphone camera has outscored the iPhone 7 camera. DxOMARK also rates 6 other smartphones with a camera performance score better than that of the iPhone 7. Interestingly enough, the firm is yet to rate the dual camera shooter on the iPhone 7 plus. Well, as the presence of 6 other higher rated smartphone cameras haven't been much of a discussion w.r.t iPhone sales, it's hard to describe the Pixel as a credible iPhone threat on this front.
Coming to the second point cited in the Motley Fool post, will the free storage prove to be much of a differentiator? A point worth noting is that Apple charges a fee for its iCloud storage. The author also claims that the base tier of the iCloud storage (50 GB option) is not very useful for a 'photo professional'. Well, Google has been offering unlimited storage with its Google photos app for quite a while but that hasn't really hurt Apple Inc., given that the company accounts for the largest chunk of premium smartphone sales, globally.
Another point to note: How many people do feel (understand) the practical difference between a DxOMark score of 86 vs 89? I am not too sure there are so many such customers in the huge mass of smartphone buyers. So, is it just about the professionals? If that's the case, how many professional photographers actually buy a smartphone for photography? Well, while it might be true to a certain extent, I suspect if such a user base would be large enough to hurt iPhone 7 sales.
In conclusion, we don't see the Pixel smartphone launch from Alphabet Inc. as a meaningful threat to iPhone sales or, by corollary, to Apple Inc. stock. On the contrary, the offering could turn out to be the best Android offering in the market (AMOLED screen and best camera were big selling points of 'Samsung') with its best-in-class hardware specs. Apple has been able to maintain its iron grip in the premium smartphone market inspite of higher rated cameras or other differentiators in the Android army. It's hard to believe that the 'Pixel' will be enough to hurt Apple Inc.'s iPhone dominance.