Slashdot Asks: How Long Before Google Shuts Down Its Little — But Expensive — Pixel Smartphones Project?

After years of its on and off interest in smartphones, Google today produces some of the best phones on the planet. The Pixel 3 and the 3 XL take better pictures than most smartphones — certainly any phone that predates them. But the whole idea of Google making handsets — being also the company that maintains Android and has relationship with hundreds of OEM partners that themselves make and sell Android handsets — has also been peculiar. Additionally, Google itself has an alarmingly long track record of losing interest in things, including hardware projects — and especially when they finally appear to have courted a large following. Richard Windsor, director of research firm Radio Free Mobile, adds: While the wires are already speculating on the form factor of the Google Pixel 4 due to be launched in Q4, I am wondering whether this will be the last smartphone that Google makes. Ever since it wasted $12.5bn of shareholder’s money on Motorola Mobility in 2012, Google has had a bad condition of what I refer to as engineering disease (see here and here and here). I diagnose engineering disease as a condition where engineers often get so excited about whether they can develop something that they forget to ask whether they should develop that something. Engineering disease almost always ends in financial disaster and I calculate that Google’s hardware business has done nothing but burn cash since the day it was created. Worst of all, I can find no logical rhyme or reason why Google needs to make hardware other than a foolhardy attempt to take on Apple. This it will never be able to do unless it takes Android fully proprietary so that it can control the experience from end to end and it has been unable and unwilling to do this to date. Furthermore, Samsung has done a much better job at taking on Apple given its scale, brand, distribution and the fact that its core competence is to take the innovations of others and make them smaller, better and cheaper. […] This is why I have argued that Samsung and Google should stop wasting money on each other’s core competence and throw their lot in together. The problem for Google hardware is that the days of under-performing businesses hiding under the skirts of the giant search cash machine are coming to an end. We have already seen this as in March, the Pixel Slate and Pixelbook team was cut back due to the lackluster sales of the product. The three versions of the Google Pixel have sold in paltry volumes with market share never reliably exceeding 0.3% with 4.5m units sold in 2018. Given the low volume, I would estimate the gross margin of this product is around 20% in the best instance which after product development costs and marketing leaves very little if anything left over. This is not the kind of performance that Google is used to which combined with an apparent inability to really get the hardware right (see here) means that Dr. Ruth Porat (CFO of Alphabet) will be asking some very hard questions of this division this year. Consequently, I think that Google needs to see a significant step up in performance with the Pixel 4, otherwise, it too may fall under the surgeon’s knife. […] The time to pull the stops out is now as failure is likely to result in there being no Pixel 5. How long do you think Google would keep funding the Pixel phones project?