Google's Pixel Android strategy is destroying HTC the same way Moto X gutted Motorola
Ten years ago, Google offered Taiwan's HTC a lifeline of sorts in the form of an Android partnership for the original HTC Dream, followed by Nexus One. However, the former Windows Mobile contract manufacturer hasn't fared so well since. Google's last two years of HTC-built Pixels have done nothing to help the struggling company.
Pixel 2 and 2 XL were premium priced, poor sellers
HTC had been a contract manufacturer for a series of Windows Mobile vendors. Its growth was blunted with the introduction of iPhone, but its early partnership with Google's Android brought it back to 67 percent annual growth in 2011. Then things went badly.
HTC's own phones were destroyed by Android peers when Google's Nexus subsidy passed to Samsung, LG and Motorola. Its next collaboration on Google's Nexus 9 tablet was a bust. Selected by Google to build the Pixel, HTC's sales slipped again. And despite building the Pixel 2, HTC continues to report a bloodletting.
Why did two generations of Pixel phones perform so badly? Google pursued a software-first strategy that promoted exclusive, proprietary camera features other Android phones didn't have. But there was little else offered to make Pixel competitive with other Androids that cost far less than Google was asking. And nothing about Pixel or Pixel 2 really offered anything to compete with last year's iPhone, let alone the newest iPhones Apple had released at the same time.
In dramatic contrast to Apple's supply chain expertise, Google's Pixel is effectively helping to starve its own supply chain to death. Yet while sources from Bloomberg to the Wall Street Journal and Japan's Nikkei desperately search for potential problems among the often-false rumors surrounding Apple's tentacles of production, there's been nothing but glowing admiration for Google's wholly incompetent decade of ineffectual stabs at building a hardware business.
There's not even any pointed criticism of Google's round robin strategy of throwing resources at one Android licensee, then yanking support to work with another. When Apple switches suppliers, there's full, detailed coverage of the poor plight of the company that loses its business. Apple is even held to blame for App Store developers who can't find success. Yet nobody in Android land blames Google for the overall lack of commercial returns from Android. Among hardware partners, Android has also been problematic.
Despite Google's direct "help," HTC's revenues across the first six months of 2018 have collapsed by more than 49.25 percent over the year-ago period (which already wasn't so good). The YoY change in revenue is progressively getting worse on a monthly basis. In June, HTC reported a new peak plunge in revenue of 67.64 percent under the previous year. Last summer, HTC reported a summer bump in sales that totally failed to materialize this year. Instead, sales just kept dropping.
Google's supposedly stellar "brand value," its series of sycophant columnists installed at the Verge and elsewhere, and its tenacious grip on web advertising didn't help one iota to push buyers-- not even Android fans-- to pay a premium for Pixel phones (or tablets, which ended up canceled entirely).
This wasn't a unique event. Google previously destroyed any real hope for Nest by taking it over and seeking to align it with its true vision of Android. And before that, Google's takeover of Motorola-- once hailed as a genius deal on the level of chocolate and peanut butter-- turned out massive flops like Moto X, which not only failed to make much money but actually incinerated $700 million across just the last six months of its production.
The tech media appeared completely blind to any possibility that Google might not be widely successful in hardware, despite its foundering for years in failed attempts to produce phones, tablets, TV boxes and other experiments under the Nexus, Q, Chromebook and Pixel brands. Given Google's history before the phone, it should have been easy to predict that the company's best case scenario might be facilitating the production of cheap phones for the low-end, mass market, not a premium device to rival Apple's iPhone.
But just months before Google gave up and sold off the one-time American icon to a Chinese company, Steven Levy wrote the official company line in an article for Wired: "Moto X is the first in a series of hardware products that Google hopes will supercharge the mother company's software and services."
After Google's five generations of Nexus, two cycles of Moto X and two of Pixel, it's getting increasingly ridiculous to suggest that Google's well-established failure in designing, producing and marketing hardware is going to be reversed by new software update plans, new software technology, or a clever new machine learning software feature.
Pixel 2 and 2 XL were premium priced, poor sellers
Google's Pixelation of HTC
HTC reports revenues monthly, charting out a sad story of Android tears that began in earnest back in 2010 when Google partnered with the Taiwanese phone maker to produce Nexus One.HTC had been a contract manufacturer for a series of Windows Mobile vendors. Its growth was blunted with the introduction of iPhone, but its early partnership with Google's Android brought it back to 67 percent annual growth in 2011. Then things went badly.
Google's Pixel is effectively helping to starve its own supply chain to death
HTC's own phones were destroyed by Android peers when Google's Nexus subsidy passed to Samsung, LG and Motorola. Its next collaboration on Google's Nexus 9 tablet was a bust. Selected by Google to build the Pixel, HTC's sales slipped again. And despite building the Pixel 2, HTC continues to report a bloodletting.
Why did two generations of Pixel phones perform so badly? Google pursued a software-first strategy that promoted exclusive, proprietary camera features other Android phones didn't have. But there was little else offered to make Pixel competitive with other Androids that cost far less than Google was asking. And nothing about Pixel or Pixel 2 really offered anything to compete with last year's iPhone, let alone the newest iPhones Apple had released at the same time.
In dramatic contrast to Apple's supply chain expertise, Google's Pixel is effectively helping to starve its own supply chain to death. Yet while sources from Bloomberg to the Wall Street Journal and Japan's Nikkei desperately search for potential problems among the often-false rumors surrounding Apple's tentacles of production, there's been nothing but glowing admiration for Google's wholly incompetent decade of ineffectual stabs at building a hardware business.
There's not even any pointed criticism of Google's round robin strategy of throwing resources at one Android licensee, then yanking support to work with another. When Apple switches suppliers, there's full, detailed coverage of the poor plight of the company that loses its business. Apple is even held to blame for App Store developers who can't find success. Yet nobody in Android land blames Google for the overall lack of commercial returns from Android. Among hardware partners, Android has also been problematic.
Despite Google's direct "help," HTC's revenues across the first six months of 2018 have collapsed by more than 49.25 percent over the year-ago period (which already wasn't so good). The YoY change in revenue is progressively getting worse on a monthly basis. In June, HTC reported a new peak plunge in revenue of 67.64 percent under the previous year. Last summer, HTC reported a summer bump in sales that totally failed to materialize this year. Instead, sales just kept dropping.
The Lethal Google Phone
Google's devastating impact on HTC is particularly notable because Pixel and Pixel 2 were supposed to be evidence that Google could produce an iPhone-priced, premium Android phone-- if only it could bypass the incompetence and foolishness of its bumbling, adware-infatuated Android licensees. Yet after Google took the reins, HTC went from having problems to suffering a full-blown crisis.Google's supposedly stellar "brand value," its series of sycophant columnists installed at the Verge and elsewhere, and its tenacious grip on web advertising didn't help one iota to push buyers-- not even Android fans-- to pay a premium for Pixel phones (or tablets, which ended up canceled entirely).
This wasn't a unique event. Google previously destroyed any real hope for Nest by taking it over and seeking to align it with its true vision of Android. And before that, Google's takeover of Motorola-- once hailed as a genius deal on the level of chocolate and peanut butter-- turned out massive flops like Moto X, which not only failed to make much money but actually incinerated $700 million across just the last six months of its production.
The tech media appeared completely blind to any possibility that Google might not be widely successful in hardware, despite its foundering for years in failed attempts to produce phones, tablets, TV boxes and other experiments under the Nexus, Q, Chromebook and Pixel brands. Given Google's history before the phone, it should have been easy to predict that the company's best case scenario might be facilitating the production of cheap phones for the low-end, mass market, not a premium device to rival Apple's iPhone.
But just months before Google gave up and sold off the one-time American icon to a Chinese company, Steven Levy wrote the official company line in an article for Wired: "Moto X is the first in a series of hardware products that Google hopes will supercharge the mother company's software and services."
After Google's five generations of Nexus, two cycles of Moto X and two of Pixel, it's getting increasingly ridiculous to suggest that Google's well-established failure in designing, producing and marketing hardware is going to be reversed by new software update plans, new software technology, or a clever new machine learning software feature.
Comments
I love lines like this. Classic.
Quoting from another source last year: "In the span of just three years, they released the Desire, Droid Incredible, Legend, Wildfire, myTouch 3G Slide, Aria, Evo 4G, Desire HD, Desire Z (aka the T-Mobile G2), Panache (aka the T-Mobile myTouch 4G), Gratia, Inspire 4G, ThunderBolt, Evo Shift 4G, Incredible S, Wildfire S, Droid Incredible 2, Nexus One, Merge, Sensation, ChaCha, Salsa, Evo 3D (the 3D didn’t work), myTouch 4G Slide, Evo 4G+, Raider 4G (aka the Vivid 4G and Velocity 4G), Rhyme, Evo Design 4G, Hero S, Amaze 4G, Explorer, Sensation XE, Sensation XL, Rezound, One X, One XL, One S, One V, Evo 4G LTE, J, Desire C, Droid Incredible 4G LTE, Desire V, Desire X, and J Butterfly.
It glutted the market with so many phones that it became hard for consumers to tell what was good (the Nexus One) and what wasn’t (the ThunderBolt)...
Nothing captures this better than the ThunderBolt incident. The phone was launched in March 2011 to great anticipation. It was the first device to come with access to Verizon’s LTE network. People were excited.
The early adopters didn’t count on HTC dragging its feet at every step along the way. The ThunderBolt got Gingerbread in late 2011, months after its announcement. It didn’t get Ice Cream Sandwich until February 2013, well after the release of 4.2 Jelly Bean.
One of the reasons why it takes HTC so long to update its phones is because of the high level of modifications it adds to stock Android. Each device runs Sense, its first-party custom skin. Pushing updates to its devices takes longer because each update has to be rewritten for the skin.
To make matters worse, Sense-ified Android was atrocious. Remember all those Gingerbread phones? Most of them didn’t have the hardware to handle the extra load from Sense. The skin slowed down the phone and mired users in a hell of launcher redraw and unnecessary modifications."
https://www.technorms.com/30768/analysis-htc-struggling-to-survive
Businesses come and businesses go. LG's smartphone business is no better off and for some of the same reasons. Samsung is hammering with marketing budgets only Apple can match. The Chinese manufacturers are willing to put off a little profit by making it difficult for the HTC's and LG's to compete on prices, a luxury they don't really have, and make it up later once the players weed themselves out a bit.
While it might play well with the audience not every bad decision and unlucky break (HTC/LG) or success story (Samsung/Xiaomi/Huawei) in the world needs to be laid at Google's feet IMHO.
Things haven't changed for the better since this old chart from 2014 explaining the rise and fall of HTC: https://www.techinasia.com/htc-rise-and-fall-infographic
Fun fact: A lot of the data from that chart was supplied by Horace Didieu so it should be trustworthy.
Google's execution over the years has been quite sloppy, especially at the high end. The appeal of the Nexus line was that it offered stock Android showcasing what Google really wanted it to be and the fastest updates possible. Why anyone would buy anything else was beyond me. Samsung was/is really the only other major player, much of that I attribute to their giant marketing budget as well as in-house component manufacturing. Android was built by Google for Google to succeed and the device manufactures were all expendable.
Apple's philosophy of limiting their scope while knocking it out of the park is what got me to convert to the iPhone. Once I got a MBP and saw the level of integration between devices it got me to stay. iMessages was also a leading reason as most of my non-tech friends/family had iPhones and had no desire to stray from what worked for their needs.
Laptops the same way. Google Chromebooks in 2018 grew 50% yoy while Mac sales peaked in 2015 and Windows years ago. Only one growing is Chromeboiks but took years. Same with K12 for Google and now over 64% share in the US.
Even search took a while as well as Gmail. The only over night success that comes to mind is the Google WiFi. It has taken 18 months for the Google home to over take the Alexa devices.
Guess the other they will lead from the beginning and would guess keep it is self driving cars. But in most cases Google comes late and takes years to domintate.
Nothing against the Chromebook, but it isn't for everybody.
What a debacle. SMS messages often go unsent, chronic app crashes. His OS is up-to-date with the latest Android release, he runs almost nothing beyond the "stock" software, but it’s still just a mess. The crashes are unpredictable so I can’t even say “okay, show me where the bad man touched you a common operation that will donk out your email.”
Android is a lost cause, for folks who think buying $10 boots that wear out in a month is more economical than a $200 pair that will last a lifetime, people who didn’t even want smartphones in the first place, and anti-Apple partisans who will make excuses for anything. It’s truly the Windows of smartphones. I get why Project Fuchsia is such a big deal to Google now.
Sad story, as HTC would be a far better competitor to Apple, comparing to horrible UX that Samsung offered.
My understanding of what Google did with Nexus and Pixel is the following: Nexus they went to HTC and others and said give them a phone they can put their name on. That obviously did not work well so they step up to the next level and put together a design spec for a phone and then went to HTC and ask them to design and build a phone to Google designs specs. Google does not have the thousands of hardware design engineers it take to design a phone from scratch and do all the necessary testing and such. "Their Design" was them taking reference designs from chip manufacturers and put them together with their design and performance spec and handed that over to HTC and had their thousands of engineers go to work can come up with an original design which Google approved then HTC made the product for them.
The reason Google fails is because they see no value in the hardware, this company is run by a bunch of software types and they see hardware only a means to the end like using a pencil to write on paper. The words on the paper have more value to them and who made the paper and pencil. Forget the fact some pencils and paper are far better than other so if you want your written words to out last the writer then it requires better lead in the pencil and the paper has to be of a quality which will not deteriorate over time. Google may have great feature in software but if the hardware that runs it is subpar than know one will know how good it is.
This is something Steve Jobs always understood, you can not change the world if your work can not our last its creator.
Google didn't have the slightest possibility of killing the iPhone. You think they tried but you are wrong.
That said, it is clear they are not throwing in the towel just yet. They recently took onboard a lot of engineering talent and there are Pixel 3 rumours everywhere. The Pixel 2 doubled the previous attempt (in unit sales, I believe) and it's clear they are taking things step by step and testing their design, supply, marketing and support options.
I don't know if they are in it for the long run but it's way too early to draw conclusions and the idea that they were somehow the jinx on HTC is pretty wacky. The entire smartphone market has changed radically ina few short years. Even Apple's sales have been flat for a while now.
But despite being reasonably good at software, Android itself sucks. Java turned out to be a lousy platform upon which to build mobile devices and it’s gotten bad enough that they’re starting over with a clean slate (Fuchsia).
And their consumer experience also sucks. Lousy marketing, and no equivalent to the Apple Stores and Genius Bars. Going back to my story about my physical therapist earlier: If he were having these problems with an iPhone, I’d tell him to just walk down the street to the Apple Store (it's eight streets away). There's no Genius Bar for Nexus phones; his emails to Google support go into a black hole.
Ironically, I think hardware is the only problem Android phones don’t have.
The hardware is junk I used them for 7 yrs because the companies I work for made us use them since they were cheaper while everyone else I knew include my family were on iPhones since day one. I can provide you a long list of issue Android phones had over the years That I never saw on Apple products. I am not saying Apple did not have it share of issue, but most had nothing to do with Apple not caring about hardware design.
One and this still exist battery life, android phones sacrifice battery life (Charge/Discharge cycles) to over all performance. Android phones over clocked the processors to get those few extra benchmark performance points but they over heated the battery in the mean time so batteries died in 6 to 12 months. This is why Android phones had replaceable batteries for so long, but they market as a much have feature verse a necessity due to the fact they knew battery would have an early life failure. Samsung had battery fires due in part to charging the battery incorrectly and damaging the battery cell.
Android phones had memory management issue this is why they have so much DRAM, against marketed as a mush have and apple was doing something wrong since they did not give consumer more DRAM to run apps fast. It was done to cover up short comings in their hardware memory management.
Why of you think Android phone have very low resale value because they are not work much after a yr or two old. Most end up being recycled, Apple has the opposite problem, thus the reason the sales have tops our in the 70M range their phones last a long time through multiply software updates. Part of the reason Google has not solved the software update product is due to hardware limitation that exist in the Android world.
Trust me they have lots of hardware issues, and Google does not respect the value that Hardware has in the overall strategy. If google really saw value in hardware they would not allow outside companies design their hardware.