Is the title surprising? We wouldn’t like to think so. The writing has been on the wall for some time now. Maybe the only reason Apple Inc. (NASDAQ:AAPL) has been generating the insane amount of revenue from the sales of iPhones despite the exhaustive price tag because people haven’t paid attention to its competitors as much as they should. But industry analysts estimate that Google Pixel will be recording a two-times increase in their revenue by 2021. Let us look at the news in a little more detail.
Google to Finally Arrive on the Smartphone Scene?
The Google Pixel phones have been around for some time now. The features offered by it aren’t bad by any stretch either. It’s just the dominance of Apple in that mobile segment that makes business hard for the Pixel phones. However, things are going to change, according to analysts.
The revenue generated by Google Pixel Phones in 2018 amounted to $3.42 billion. However, by the end of 2021, the revenue from Google Pixel smartphones is expected to reach a whopping $6.92 billion, more than double of that in 2018.
But, it won’t mean that Google will be absolutely taking over the smartphone industry by storm. Actually, far from it. Currently, the Pixel phones account for just 1.5% of the global smartphone market. By 2021, when the revenues are expected to be doubled, the share of the Pixel phones is only expected to rise up to 2.4%. This signifies what a slight increase in shares can do to the revenue of a product, especially for smartphone manufacturers.
Where Does Apple Stand In All of This?
Apple has been undergoing a sticky period recently. The sales of the iPhones aren’t like they usually were. People haven’t taken to the iPhone XR, XS and XS Max as the tech behemoth expected. Instead, people are resorting more to buying the older models of the iPhone which are available at cheaper rates. Furthermore, the iPhone shipments are expected to decline even further. In fiscal 2018, the sales of iPhone reached about 217 million units. However, come fiscal 2019, the shipments are expected to reduce to 188 million to 194 million units. This represents a decline of 5-10% in shipments.
No matter how many people decide to buy the older iPhones at cheaper rates, it will be difficult to recoup for the lack of sales of the recent iPhones. On top of that, the company recently announced that it won’t be disclosing its unit sales figures anymore. And in the light of the current trend, Apple might have just avoided a lot of negative PR in the future through this.
Is the Smartphone Market Changing?
It is a valid question to ask in the current scenario. Apple has been profiting as much as it has been in recent years mainly because increased ASP of iPhone and no-compromise policy with its profit margin on iPhone, thanks to the strong brand loyalty of its fans. However, after being in such a strong position for so long, Apple has been apparently struggling to justify its iPhone pricing strategy to masses who are slowly getting attracted towards the likes of Google Pixel, OnePlus 6T, Huawei Mate Pro and Galaxy S9 Plus which are offering many similar specs at almost 30%- 40% lesser price.
At the same time, for the last few years, new iPhones have been facing enough criticism for lacking innovation. Barring those users who either consider iPhone as a mix of marketing and productive tool or a lifestyle luxury product, a majority of people are finding more value in other devices. Hence, Apple had the current scenario coming to them.
However, the Google Pixel can’t assume dominance of the worldwide smartphone market anytime soon. It is going to be a long drawn out process spanning over a couple of years or more. The biggest challenge for Google is going to match the brand value of iPhone – which has reached up to the level of luxury segment now. But one thing is certain – The writing’s on the wall.
The iPhone era is coming to an end unless Apple decides to revisit its iPhone sales strategy to cater to both classes and masses.