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Bill Bennett

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Google dominates search, and hence the internet, like no other company. Everything seems to be about collecting data on users and their habits then turning this into money by selling advertising. It’s a strategy that works. Android, Google Apps and everything else seems to fit somewhere in this plan.

Google’s curious Pixel phone strategy

Nikkei Asia reports on Google’s modest Pixel 5 phone goals:

“Google plans to produce less than 1 million Pixel 5 smartphones this year, sources told Nikkei Asia, signalling a far more conservative outlook for the internet giant’s flagship device than last year.

“Production could be as low as around 800,000 units for the 5G-capable flagship smartphone…”

The Pixel 5 runs Android 11. It supports 5G networks. There’s a six-inch screen, two back cameras; a 12.2 megapixel main camera and a 16 megapixel ultra wide camera. There is a cheaper Pixel 4A model.

A phone that waits in hold for you

One of its features allows you to have Google Assistant wait on hold until a human picks up the phone at the other end.

If Google has plans to sell the Pixel 5 in New Zealand, it is keeping quiet about them. Parallel importers have brought in previous models. The international price is US$700, which translates to around NZ$1300 or $1400 here.

This will be a rough year for phone makers. Yet if the Nikkei report is correct, Google’s own brand models will be a rounding error for the market.

Let’s put the number in perspective. Phone makers shipped 295 million phones in the second quarter of 2020.

A rounding error

Even the most bearish observers expect to see more than a billion units sold during the full year. On those numbers Google won’t account for 0.1 percent of the total.

Samsung, which like Google uses Android, should sell more than 200 million phones. Huawei, which can no longer use Google services expects to sell a similar number.

As the Nikkei story points out, Google’s phone making suffered in the Covid-19 pandemic. But then every phone maker hit the same problem.

The Pixel phones are oddballs. In the US a single carrier, Verizon, lists them. Americans are more inclined than people elsewhere to buy their phones from carriers.

Not a phone business

For Google, phones represents a tiny slice of the business. They don’t need to make money. Pixel phones are more about Google showcasing technology. It’s no accident the wait on hold feature appeared first on a Pixel phone.

They serve to put pressure on other phone makers to continue innovating.

Google may want to keep a toe-hold in the market for strategic purposes. For now, Pixel is not mission critical at Google. It’s a hedge against a possible future.

Phones are mission critical for the big brands: Samsung, Apple and Huawei. For those companies, phones are central. They provide cash flow, and, all being well, profit.

Google’s goal is to push as much traffic as possible through the company’s data collection, if you like, surveillance, services. Pixel helps keep that on the boil.

The company has deep enough pockets to push the button and ramp up production. It may do that one day if it is necessary. Pixel means if that happens, Google won’t be starting from a long way behind the pack.

Huawei Y6P review: Budget phone but no Google

Huawei’s NZ$3001 Y6P comes with a three lens rear camera and a 5000mAh battery. There is a 6-inch screen and 64GB of storage.

You get a lot of phone for $300. Low cost phones always come with compromises. This one is a potential killer. A US technology ban means Huawei can’t sell Android phones with all the Google trimmings.

If you prefer US surveillance capitalism over a Chinese alternative stop reading now. This is not for you. Look elsewhere.

Google free zone

There are no Google apps. Instead Huawei offers its own app gallery and a new app to help you find apps that run on post-Google Huawei phones. We’ll look at the Petal Search app in a separate post.

A word of warning: there will be popular paid for or subscription Android apps that won’t run on this phone. That said, if you use that kind of software, it’s unlikely you’d be looking for a bargain basement phone.

The phone hardware is promising enough. Huawei says that 5000nAh battery is good for 32 hours of video playback. It will handle 20 hours of web surfing using mobile data. In normal use you should go two or more days between charges.

Charging other phones

Huawei has included hardware that allows you to charge other phones from the Y6P. You’ll need to buy a separate reverse charging adapter to do this.

The adaptor is not available on Huawei’s New Zealand website at the time of writing. Finding one online shouldn’t be a struggle, but it highlights a lack of attention to detail. It’s something you wouldn’t expect Apple to miss.

Almost the entire front of the phone is a 6-inch 720×1600 display. Huawei’s specification sheet says 6.3-inches, but the image doesn’t go to the edge of the display.

Huawei calls its display Dewdrop. That’s a fancy way of saying the camera notch is tiny compared with other phones. It is, but in practice it is no less irritating.

Y6P camera

Phone makers spend a lot of time talking about cameras. This is the main area where the Y6P departs from premium phones. Keep in mind, the Y6P is at least a grand cheaper than today’s top handsets.

There’s a 13 megapixel camera on the back. It comes with a 5MP wide angle camera and a 2MP depth camera for bokeh shots. The front camera is 8MP.

No-one is going to get excited about the phone’s photography. It’s more than adequate, roughly in line with what you might find on a premium phone three or four years ago. This is more than enough for casual photography, but don’t plan to shoot you next movie on the Y6P.

It’s not a fabulous phone. Yet the Y6P is great value. The big problem is that while it looks like and feels like an Android, it isn’t.

Although you can work around the restrictions, you may not want to. There will be readers who enjoy that challenge. You may have better things to do with your time.


  1. If you’re quick you can buy the Huawei Y6P phone for $200. After August 10 the price will be $300. ↩︎

Above Avalon on Apple pulling away from competitors

Apple Installed Base (Number of Users)
Apple Installed Base (Number of Users)

For the second year in a row, Apple held a developers conference that should frighten its competitors. Relying on a nearly maniacal obsession with the user experience, Apple is removing oxygen from every market that it plays in.

At the same time, the tech landscape is riddled with increasingly bad bets, indifference, and a lack of vision. Apple is pulling away from the competition to a degree that we haven’t ever seen before.

Source: Above Avalon: Apple Is Pulling Away From the Competition

Above Avalon analyst Neil Cybart says Apple is stealing a march on other technology companies. He says the company has made long-term decisions that mean its rivals will struggle to catch up.

The story needs to be read through a careful filter. Cybart writes about the company both from an investment point of view and from a Silicon Valley perspective.

This doesn’t necessarily make his analysis biased or wrong, it isn’t,  but it can lack broader context.

Coherence

Cybart’s main idea is that Apple has pulled now all its strands together. The range of products and services has a new coherence and a clear direction.

This, according to Cybart, comes at a time when rivals are weakening.

Together these two trends have set up conditions that will move the company even further ahead of rivals over the next decade.

He makes a good case. Yet there are flaws in this line of thinking. Maybe flaw is too strong. Let’s say questions.

Samsung lack of vision

In the middle of the web post Cybart lists the ways Apple is beating key rival technology companies. He, rightly, notes that Samsung “remains rudderless from a product vision perspective.”

While that’s true, Samsung is a major component supplier to Apple and other hardware companies. If you look closely at Samsung’s financials, it’s clear the areas that compete with Apple are not central to Samsung’s profits.

The areas where the two companies co-operate are more important to Samsung.

Cybart correctly dismisses Google and Amazon as direct rivals. In the greater scheme of things their hardware products are inconsequential. Yet both remain on growth trajectories that could yet pose a threat to Apple.

Microsoft hardware

Microsoft’s hardware move has failed to alter the balance of power between Macs or iPads and Windows hardware. Cybart is right on the money when he says Surface mainly takes business away from Microsoft’s Windows partners.

Yet like Amazon and, to a lesser degree Google, Microsoft is powering ahead with cloud computing. These companies are building a significant digital world where Apple doesn’t play.

This is not a criticism of Cybart’s story. He is on the money as far as personal computer hardware and its immediate successor technologies are concerned. Apple does look set to dominate.

Beyond this there are parallel markets where Apple is, at best a bit player. These markets interact with Apple’s market. In the future they may interact in ways that are not yet clear.

Shorn of context, Apple is powering ahead. But let’s not forget Amazon and Microsoft are also powering ahead. Technology is not a simple zero-sum game.

Google pays tax on larger small fraction of total NZ income

Google published its New Zealand accounts for the year to December 31,2019 earlier today.

According to the company’s financial statement Google’s 2019 revenue was NZ$36.2 million. That’s more than double the $17.5 million it made in 2018.

Sales and marketing expenses for the year were $20.4 million. This compares with a shade over $3 million in the previous year.

Which leaves the company with a 2019 profit of $10.6 million. In 2018 the profit was $0.6 million.

More Google tax

It means Google pays more New Zealand company tax than in the past.

Google says its 2019 tax bill is $3.6 million. In the financial statement the income tax expense is listed as $2.5 million. Apparently the lower number is the tax paid during the 2019 year, while $3.6 million represents the total tax the company will pay.

It’s a lot more tax than in the past. Google paid around $400,000 for the previous year.

Yet it is nothing like the whole story. While Google may have booked $36 million of New Zealand revenue in 2019, the figure is only a small fraction of the total amount of business it did in the country.

Does not include everything

A simple back of an envelope calculation shows Google will have booked a total of well over $NZ500 million in advertising last year. The company also has a cloud computing operation, although that is small compared to its advertising business.

The Australian Competition and Consumer Commission (ACCC) estimates Google made around A$3.7 billion in Australia in 2018.

In 2018 Google changed the way it does business in New Zealand to what it calls its ‘reseller model’. Before that the local office was financed out of the Singapore operation.

Governments around the world are moving to close the loopholes that let tech giants like Google and Facebook avoid paying full local taxes in the countries where they do business. The US government objects to this.

New Zealand’s government has said it hopes to be part of an international approach to the problem and will work with the OECD. This has been slow to date and many countries, including Australia, are moving to introduce a digital services tax.

Google, Facebook pay less tax in New Zealand than Australia

At The Conversation Massey University lecturer Victoria Plekhanova writes: Google and Facebook pay way less tax in New Zealand than in Australia – and we’re paying the price.

She says:

While the internet has created new opportunities for media and audiences alike, those opportunities have come at a price. Traditional media organisations now compete with giant digital platforms, not only for the attention of readers, but also for the advertising revenue that was once their lifeblood.

Adding insult to injury, the digital platforms compete for audiences’ attention partly by distributing the news content that was first created and published by those now-struggling media organisations.

This not only damages the media and public discourse, it is harmful to taxpayers.

Plekhanova says Google paid A$426.5 million in Australian digital service tax in 2018. That’s 66.5 times the amount of tax paid in New Zealand: “Given the New Zealand economy is about a seventh the size of Australia’s, this is an extremely wide disparity”.

There are also rules forcing Google and Facebook to compensate publishers when they piggyback off their original content.

The idea of a digital service tax isn’t that unusual. Other countries have a similar tax.

All of this makes sense. We let the overseas media giants freeload here. Part of their income depends on services that have been provided by taxpayers. Some of that income even comes direct from government agencies which buys advertising on the two social media giants.

It amounts to a net transfer from the New Zealand taxpayer’s pocket to social media investors: some of the richest people in the world.

Ideally the OECD would deal with this problem. But that’s been a long time coming and the money continues to flow in one direction only.

Plekhanova comes unstuck when suggesting taxing or charging tech giants will help local media survive. The damage was done ages ago. Survival depends on more than taxing the giants and anyway, up to a point the main local media outlets depend on the tech giants to reach their audience.

So, yes, let’s tax Google and Facebook like countries tax extractive industries. And, at least, stop pour government money into their coffers. But let’s not kid ourselves this is going to fix our media problems.