Google Pixel and Global WiFi

Google is making the Pixel the central piece in its hub-and-spoke software strategy.

Investing heavily in the development team at HTC ($1.1 billion in Taiwanese smartphone manufacturer HTC Corp) and the Pixel allows Google to come up with an enhanced version of its Android OS, the most widely used in the world. Doing so also allows Google to market its own phone in a way that won't upset its partners who rely on Android (particularly Samsung).

Let's say the Pixel captures just 5% of the global market for smartphones. That would give it sales of 75 million units a year. And at a conservative $650 average selling price, $48 billion in new yearly sales. Even better for Google is how that advance will spark interest in other parts of its tech ecosystem.

For instance, the company has its Nest thermostat, the Chromebook laptop, the OnHub Wi-Fi router and Chromecast. It also has an AI-driven Google Home smart speaker. Google Assistant is the company's version of Apple's Siri – and it will integrate to the Home device and Pixel.

There's another aspect of Pixel's emerging role that no one on WS or the media mentioned - the device fits nicely into Google's vision of a wireless world. Back in 2015, the firm joined with Fidelity Investments in a $1 billion investment in Elon Musk's SpaceX. That means Google owns about 10% of SpaceX – doing so because more than two-thirds of the world's 7 billion people lack Internet.

By backing SpaceX, Google hopes to be able to launch a new generation of small satellites that will beam web signals to remote regions of the world, and hav its Pixel ready. It's a robust smartphone that allows all of these billions of new users to connect to its far-flung Wi-Fi system. 

Over the past three years, the company has grown sales by an average 18%. If all it did was keep that same rate, earnings per share will have doubled in exactly four years. That doesn't even take into account that the new Pixel 2 could add several billion dollars in profits some three years out.