Google will also benefit from Android user monetisation thanks to Pixel exclusive features
Google Pixel, the first 'Made by Google' smartphone could generate $3.8 billion in revenue in 2017. Google is expected to sell around 5-6 million Pixel smartphones next year.
According to Morgan Stanley, the Pixel range of hardware could become the next cash cow for Google. The bank estimates Google will sell 3 million Pixels in the last three months or during the fourth quarter, generating $2 billion in revenue. Google Pixel and Pixel XL smartphones retail between $649 and $869.
For record, Apple has sold nearly 212 million iPhones in FY 2016 and has generated $13.7 billion in revenue. In Q3 2016, Apple sold 45.5 million iPhones but the profits are declining.
Morgan Stanley says Google's Pixel phones will generate a gross profit margin of 22 - 25 percent and it says the Pixel brand will be half as profitable as iPhone. Morgan Stanley note suggests Google will also benefit from Android user monetisation thanks to Pixel exclusive features like Google Assistant, Pixel camera and Daydream VR platform.
For Google, Pixel and Pixel XL are also seen as major driver for mobile search growth. Google recently announced that Pixel and Pixel XL demands have exceeded company's expectations. At Verizon, Google Pixel XL has been delayed and the smartphone is definitely hitting the right notes.