Google needs to think old school with its new phone

The internet giant owned by Alphabet Inc. has high hopes for its new Pixel 6 smartphones, which hit stores on Thursday. The handsets are running on new custom chips Google designed in-house, which is a first for the Pixel lineup that has normally used Qualcomm’s Snapdragon processor. Google says its new Tensor processors will vastly improve key features such as image processing and voice recognition.

Google appears to be putting its money where its mouth is. Nikkei Asia reported earlier this month that the company has ordered an initial production run of about 7 million units of the new Pixel 6 handsets—double the number of phones Google sold all of last year.

Selling 7 million phones would still only give Google about a 1% share of the 1.3 billion smartphones sold globally each year. Low market share has been Google’s problem ever since launching its first Pixel in 2016. The devices regularly chalk up strong reviews, with many considering them the best Android phones available. But they don’t sell—at least not in volumes significant enough to matter. IDC estimates that Google’s share of the global market remains below 0.4%.

Can Pixel 6 change that? Despite all the marketing that smartphone makers put behind the technical prowess of their devices, consumers by and large make their decisions mostly on old-fashioned considerations such as price and network availability. A recent survey by Morgan Stanley found only 4% of respondents ranked “innovative technology” as their prime reason to buy.

But better distribution could make a big difference. This has long been a weak point for Google’s phones in the U.S., where approximately 70% of handset sales takes place through retail channels controlled by the major wireless carriers. Google has long had a strong relationship with Verizon, and earlier this year it struck deals with AT&T and T-Mobile to use Google’s messaging app on the Android phones they sell. Cliff Maldonado of BayStreet Research says those deals should result in Google doing “much more volume” at two carriers where the handset has been historically weak. Both AT&T and T-Mobile have put strong promotional programs in place for the new Pixel phones.

To be clear, even a wildly successful phone will have a limited financial impact. Selling 7 million units of just the most expensive Pixel 6 Pro would generate about $6.3 billion—less than 3% of Google’s total projected revenue for this year. But higher market share would give the company a more effective showcase for its Android mobile operating system, much the same way Microsoft’s Surface devices serve its broader Windows ecosystem while also commanding only a mid-single-digit share of the laptop market, according to estimates from Gartner.

And Android could use some more glitz. The mobile operating system has slowly ceded ground to Apple’s iOS platform, thanks in part to the heavy sanctions that have crippled Chinese phone giant Huawei. Android currently powers about 72% of the world’s smartphones compared with 77% two years ago, according to Statcounter. A better selling Pixel would help Google chip away at that trend.

This story has been published from a wire agency feed without modifications to the text