Google’s Pixel phones and Pixel Watch are all about selling you software

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Wednesday 5 October 2022

Google is selling you on its software

Google (GOOG, GOOGL) is set to unveil its latest Pixel 7 and Pixel 7 Pro smartphones and its first-ever smartwatch, the aptly named Pixel Watch, at an event on Thursday in Brooklyn.

The show should be filled with plenty of talk about how Google’s AI smarts make its hardware superior to offerings from competitors like Apple. What’s more, the Pixel Watch will give the tech giant a chance to show why it spent $2.1 billion to acquire Fitbit in 2021.

But according to experts, Google’s hardware strategy isn’t about keeping up with Apple ( AAPL ) in terms of sales or trying to outdo its ecosystem partner Samsung. Rather, it is about showing global manufacturers what is possible when you combine the right hardware and software.

“I think of Google’s hardware as loss leaders,” Tuong Nguyen, senior principal analyst at Gartner, told Yahoo Finance. “They’re not making hardware to make hardware. It’s to showcase their own services and capabilities.”

An added bonus? Google’s hardware gets more users to sign up for its services and allows it to collect more data about how consumers use those platforms. The more Google understands how you use its features and the more data it can collect about your web searches, the better it can target you with ads.

Google has been releasing its own smartphones since 2010, but it’s still nowhere near as popular as Samsung, which controls 21% of the global market share, or Apple, which has 16% of the market, according to Counterpoint Research.

Google CEO Sundar Pichai delivers the keynote address at the Google I/O conference on Wednesday, May 17, 2017, in Mountain View, California.  Google gave the latest look at the digital services and gadgets it has assembled in the high-tech fray.  to become an even more influential force in people's lives.  (AP Photo/Eric Risberg)

Google CEO Sundar Pichai. (AP Photo/Eric Risberg)

And that helps not just Google, but ultimately the likes of Samsung and its Android cohorts, while making Apple look like it’s standing still — at least in terms of software.

Google leads with software

Google’s previous Pixel phones never stood out in terms of overall performance. Their cameras, at least from a component standpoint, didn’t match Samsung’s or Apple’s. It’s Google’s software features that shine.

When Google introduced its Night Sight software to the Pixel in 2018, its low-light images blew away the competition. Google has pushed other software features in subsequent years, including dialer features that navigate automated phone call lines for you and deep integration with Google Assistant. But Google doesn’t roll out these software updates to show companies like Samsung that use Android to power their devices. Instead, Google is trying to demonstrate the full potential of Android devices.

Google products, including the new Pixel 3A phone, are displayed during the Google I/O conference at the Shoreline Amphitheater in Mountain View, California on May 7, 2019. (Photo by Josh Edelson/AFP) (Photo credit to JOSH EDELSON/AFP /Getty Images)

Google’s Pixel series has been around for years. (Photo by Josh Edelson / AFP) (Photo credit should read JOSH EDELSON/AFP/Getty Images)

“This is about demonstrating what the Android experience can be, or this is what the Wear OS experience can be, and this is how they can all work together collaboratively,” Ramon Llamas, director of research for mobile devices and AR/VR at IDC, told Yahoo Finance.

Google isn’t the only company taking this approach. For a major software distributor that built its own hardware to showcase its offerings, look no further than Microsoft ( MSFT ) and its Surface line of products. The company is launching its own laptops, portable tablet hybrids, foldable smartphones and hybrid all-in-one desktops at a premium price with the aim of demonstrating what Microsoft has to offer.

Each of them, except the Duo, shows how a clean design language combined with Microsoft’s Windows 11 operating system can come together to create truly desirable PCs. It worked too. Companies ranging from Dell and Lenovo to HP and ASUS are pumping out stylish systems, and you can at least partially thank Microsoft for that.

It’s not just the looks either. Google’s Tensor chip, designed specifically for the company’s AI-powered software, is also part of the equation.

“It’s about setting an example for other suppliers,” Nguyen explained. “In this case, it’s vendors using Android. The whole Tensor chip, I think that was a message to say, ‘Hey, this is why you need a dedicated AI/ML chip in a personal unity.’ “

The Pixel Watch should follow the same formula, giving users a solid look and software meant to elevate the Wear OS brand and make third-party hardware partners think more about how Google’s software and their own hardware can merge in new, interesting ways.

More data for Google

Of course, Google is an advertising company first. And it aims to get more consumers using its range of services to ensure the Silicon Valley giant has plenty of data to target you with ads.

That’s why Google loads third-party Android devices with its Maps, Gmail, Google Search, and Assistant apps. It’s also why Google paid Apple between $8 billion and $12 billion as of 2020 to keep Google as the default search engine on its Safari browser. And putting these apps on one’s own handsets makes it far easier to reach users.

It’s also a means of ensuring you stay with Google for the long haul. Just as Apple and its vast ecosystem of apps and devices keep users connected to its platforms and services, Google wants to give you a reason to stick around.

By Daniel Hawley, technical editor at Yahoo Finance. follow him @DanielHowley

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