Google (GOOGL) announced details of its Pixel phones yesterday. HTC will manufacturer the phone, which benefits component suppliers. The bad news is that Pixel’s price is so high that companies involved in its supply chain will not derive much benefit.
Google Pixel XL will cost as low as USD $769 for the 32GB model. The 128GB model jumps to USD $869. The Canadian pricing is a sticker-shock, due partly to the exchange rates. The price starts at $899 for the Pixel and $1,049 for the Pixel XL.
At this price level, Pixel is a competitive threat to neither Apple’s (AAPL) iPhone 7 nor Samsung’s (SSNLF) Note 7 or Galaxy 7. Consumers should just buy those phones instead. Pixel may have good specifications, but the software is underwhelming. The launcher, icons, and fewer practical benefits make the Pixel underwhelming. The last generation’s Nexus cost slightly less, especially compared to Apple and Samsung devices.
It is worth noting that the latest iPhone has water protection, a dual camera (for iPhone 7 Plus), and Apple Pay. Samsung also has water protection and wireless charging.
Apple and Samsung clearly benefit from Pixel outpricing itself.
Apple’s stock closed at a P/E of 13.2x. Samsung’s stock is underperforming due to the Note 7’s recall.
