Google’s hardware business fell victim to increased competitive pressure in Q1 2019, providing little revenue support as growth in parent Alphabet’s core advertising business slowed.
During an earnings call, Alphabet CFO Ruth Porat said sales of Google’s flagship Pixel handset were down year-on-year due to “recent pressures in the premium smartphone market”.
However, Porat and Google CEO Sundar Pichai talked up the “strong momentum” of the company’s Home smart speaker and Assistant ecosystem, and teased a hardware announcement at the company’s upcoming IO conference on 7 May.
Though analysts expressed concern Google’s hardware business is not growing fast enough, Pichai reiterated the company’s “strong commitment” to the segment, noting plans to boost distribution and branding efforts.
“We really see it as incredibly important to drive the future of computing forward and to make sure our services are presented to users the way we intended them to be,” he said, adding “computing will evolve even beyond phones and we want to make sure we’re in there”.
Google does not break out figures for its hardware business but includes it in its “other revenues” category, which grew from $4.4 billion in Q1 2018 to $5.4 billion in the recent quarter.
Ad engine slows
The company’s hardware struggle came as parent Alphabet faced a significant slowdown in growth in its staple advertising business and felt the effects of a hefty €1.49 billion ($1.7 billion) fine levied by the European Commission in March.
Ad revenue of $30.7 billion was up 15 per cent from $26.6 billion in Q1 2018, compared with a 24 per cent rise year-on-year in Q1 2018.
Executives attributed the difference to seasonal changes, though other tech giants including Facebook posted strong advertising growth in Q1.
Net income of $6.7 billion was down from $9.4 billion in Q1 2018, thanks in large part to the EC fine. Total revenue of $36.3 billion was up 17 per cent from $31.1 billion.Subscribe to our daily newsletter Back