No matter how you feel about carrier exclusivity, it’s an arrangement that’s working wonders for two happy campers this holiday season: Google and Verizon. According to a report from market research firm Wave7 Research, the Pixel, Google’s first branded smartphone, is selling exceptionally well at Big Red’s brick-and-mortar stores compared to the other retail channels through which it’s available.
The Pixel and Pixel XL are Google’s answer to Apple’s iPhone and Samsung’s high-end Galaxy devices. They sport premium hardware, including chipmaker Qualcomm’s top-of-the-line Snapdragon 821 processor and up to 128GB of storage. They command premium prices, accordingly: the 5-inch Pixel starts at $650, and the 5.5-inch Pixel starts at $770. And so far, they’ve been a critical success. Reviewers have been particularly impressed by the quality of the Pixels’ cameras and the robustness of Daydream, Google’s virtual reality platform, which the Pixels are the first to support.
The Pixel isn’t a Verizon exclusive, of course. In fact, it’s on sale unlocked and off-contract at Google’s online retail outfit, the Google Store, at Google’s Project Fi carrier store, and at nationwide electronics chain Best Buy. But despite the wealth of buying options, Pixel purchasers by and large have picked Verizon as their merchant of choice. Pixel devices claimed more than 7.5 percent of activations at Verizon stores over the past month, reported Wave7, momentum from which the carrier has handily benefited. “Activations at all other carriers stores are in the 0-2 range, so activating the Pixel at AT&T, T-Mobile, and Sprint is not yet a significant factor,” read the report.
Wave7 credits “aggressive promotions” for the uptick in activations. Google and Verizon spent $15 million and $12 million, respectively, in the period between October 27 and November 2, more or less confirming reports from early October suggesting that the two would spend “hundreds of millions” on advertising in the coming weeks. Google is also expected to buy ads during Thanksgiving football games, which can run into multiple millions of dollars. And Verizon’s vice president of device marketing, Jeff Dietel, told Fortune that the carrier would invest money in TV ads, internet marketing, social media, and other campaigns that’d run through the holiday season.
Samsung’s Note 7 woes are partially responsible, too. Wave7 reports that the phone’s explosive tendencies and subsequent recall led the Seoul, South Korea-based company’s share of activations to “[decline] significantly” from summer levels across carriers.
Verizon’s competitors haven’t taken news of its success lying down. On October 20, T-Mobile began offering a $325 bill credit to new and existing customers who activated the Pixel on the carrier’s unlimited T-Mobile One plan. Subscribers who supply proof of purchase within 30 days receive the discount in the form of a 24-month bill credit.
Strong Pixel sales are no doubt music to Google’s ears. Earlier this month, analysts at DigiTimes projected the Mountain View, California-company would ship between 3 million and 4 million Pixel phones before the end of 2016. For the sake of comparison, shipments of the iPhone 7 are expected to exceed 60 million over the holiday season.
It’s a positive development, too, for HTC, Google’s manufacturing partner. The Taiwain-based company, which jointly led design and manufacture of the Pixel and Pixel XL, had a challenging recent fiscal quarter: profits dipped 78 percent year over year. It’s betting on the Pixel to turn things around — the firm expects as much as 40 to 50 percent of its mobile shipment volume to come from Google’s handsets in the second half of this year.
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