Google to target iPhones, premium Android segment with Pixel phones

Google is just 24 hours from launching its Pixel smartphones and it seems that the Internet search giant is finally waking up to the hardware game and is slowly changing its strategy from affordable AndroidOne handsets to premium handsets.

"Google sees a tremendous opportunity in India as the premium segment is currently up for grabs with the country waiting for Apple's latest releases and the delayed launch of Samsung's Galaxy Note 7," Tarun Pathak, senior analyst at Counterpoint Research, said adding that other brands like HTC, LG and Sony seemed to have exited the category.

The Pixel smartphones, which are expected to hit India with a maximum retail price of ₹49,000 approximately, is targeted at consumers who want a good Android option at the cheaper premium phone segment, he explained.

Till date, Google has not made any progress in its handsets business and has failed to do much with its AndroidOne programme which aimed to put cheap smartphones in the palms of all users.

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AndroidOne, which was launched way back in 2014, had managed to sell 3 million devices in it's one entire year of existence across 19 countries from September 2014 to September 2015. Looking closely at India-specific numbers, AndroidOne in its first year of existence has shipped 1.2 million devices to the country, making up a meagre 3.5% of the smartphones in the $50-$100 price category in India.

Even then, Google's effort at making an LTE-powered Android one device in the Lava Pixel V1 in the $150 category, fizzled out after a promising start as it was not able to hold a candle in terms of performance to the strongest seller in that price range. In terms of sheer number, the Lenovo K3 note, the best selling smartphone at the ₹11,000 price point in India, outsold the Lava Pixel V1 at a staggering 8:1 ratio with the Chinese OEM managing to ship 800,000 units in the third quarter in 2015.

"Google has finally realised that the bulk of their profit can come from the premium segment in India although the category results for only seven percent of total smartphone sales," Pathak said.

Another analyst said that the new Pixel smartphones were targeted to be the iPhone killer giving consumer a sense of affordability. "I think Google is targeting the price sensitive behaviour of Indians but it might not be successful as Apple still remains an aspirational brand," he said.

Interestingly, Cupertino-headquartered Apple is also under a lot of pressure to crack the India market as sales in China, its largest market outside US, has slowed down.

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According to a Canalys report, the company will continue to face pressure in the Chinese market even after the iPhone 7 launch and has to look at markets like India to match sales figures.

"The launch of the iPhone 6 saw Apple's shipments in Greater China skyrocket, but the company has struggled to maintain this momentum," Jessie Ding, Canalys research analyst, said in the report.

"The iPhone 6s had a lacklustre reception in comparison and the iPhone SE is unlikely to make a big difference to Apple's fortunes in the region this year. Huawei, Oppo and Vivo offer products with better specifications at significantly lower price points," Ding added.

In April, Apple had reported its first-ever drop in iPhone sales, with fiscal second-quarter unit shipments down 16% to 51.2 million. That was lower than the 61.1 million the company sold the same time last year, though it is in line with the 51 million analysts expected Apple to sell in the three months ended in March.

Even worse, the company had said that sales for this quarter may fall double-digits yet again. Apple's targeting sales between $41 billion and $43 billion for the three months ended in June, below analyst expectations of $47.3 billion.