Google is good at building phones but terrible at selling them

With the recent acquisition of one of HTC's smartphone teams, Google appears more committed than ever to being a smartphone hardware maker. The company still has a long way to go to reach a substantial customer base, though. The research director for IDC, Francisco Jeronimo, shared some interesting smartphone shipment numbers from the IDC's quarterly industry report.

The IDC says Google shipped only 3.9 million Pixel phones in 2017. That's good, in that it is double the previous year's shipments. On the other hand, the IDC says Apple shipped 215.8 million iPhones in 2017, which works out to 4.15 million a week. So Apple ships more phones in a week than Google does in a year.

They make good phones

Google's jump into the hardware arena with self-branded phones began with the first Pixel phone at the end of 2016, and the company still has a ton of work to do. Google has proven it is good at the "phone building" part of being in the smartphone business—the Pixel 2 and 2 XL are easily the best Android phones you can buy. Google hasn't made a lot of progress in the "sales and support" part of the smartphone business, however.

For starters, Google only sells Pixel phones in six to eight countries, depending on the model, so Google is not the slightest bit competitive in the worldwide market. Something like the iPhone X is available in 70 countries. Of course with a wider customer base you'll sell more phones.

Apple also has a retail empire, with 499 stores across 22 countries. The stores give Apple an army of salespeople pushing iPhones in premiere retail locations, along with a support system that can't be matched by any other smartphone provider—if you have a problem, just go to an Apple Store.

Google occasionally dabbles with pop-up stores for the holidays, and it has some dedicated displays inside electronics stores, but it's missing a standalone retail presence. Google's support system is also lacking, as support is all done online. Apple also has deals with all the major carriers in the US, putting iPhones in even more retail locations with even more salespeople. By contrast, Verizon is the only carrier selling Google phones in-store.

Even with those relatively paltry sales numbers, Google also dealt with a lot of Pixel stock issues in 2017. Even five months after the launch of the Pixel 1 at the end of 2016, the company couldn't keep the phone in stock on the Google Store. Google Hardware SVP Rick Osterloh referenced the Pixel's constant stock issues at the Pixel 2 launch, saying, "I just wish we had a few more of them to go around."

On one hand, selling basically every Pixel phone you make is a good thing, but Google probably would have sold a lot more if it had met the demand. Google seems to have improved its supply line issues with the Pixel 2, which has consistently been in stock.

We're using Apple as an example not just because the two companies are frequent rivals, but also because Apple offers the closest product lineup to Google, with only a handful of high-end models. Samsung, with a wider range of price points, is the smartphone sales leader with 317.3 million phones shipped in 2017, according to IDC. Lower-end phones lead to more sales, and Samsung matches yearly Pixel shipments every 3.5 days.

One thing not many people will realize is that Google's smartphone pricing is even more high-end than Apple's, though. Google's cheapest phone is last year's Pixel 1, which got a $100 price drop when the Pixel 2 came out and is technically for sale for $549 (although it's still sold out). Apple, meanwhile, starts its smartphone line with the $349 iPhone SE. People are much more willing to buy a cheaper product, and Google's nascent hardware brand might have a harder time convincing people to pay top-dollar.

Solving the stock issues with the Pixel 2 this year is a big improvement, but if Google really wants to compete in sales numbers, it has many more problems to solve. More countries, a better retail presence, and more carrier deals would be a good start. A phone that pushes into the value pricing market would be a big help, too.