Leading up to the announcement, Hiroshi Lockheimer, Google SVP of Android, Chrome OS and Google Play, tweeted "We announced the 1st version of Android 8 years ago today. I have a feeling 8 years from now we'll be talking about Oct 4, 2016."
Really, Hiroshi? Let's be honest - Google just isn't very good at these types of event-driven marketing releases. And the harder it tries, the more it seems to be trying too hard.
The center of the announcement was the Pixel phone. The Google Pixel is billed as a top of the line phone, but it has its share of faults. Critics say its design is uninspiring, its chin is too big, it's too thick, it's not waterproof, it doesn't have wireless charging and it's too expensive. I happen to agree with all of these criticisms and won't be purchasing one myself (you could say that I am in the target audience for this device given that I've owned several Nexus phones in the past).
The phone is being released at what some would say is just the right time given Samsung's (OTC:SSNLF) recall of the Note 7. But I don't think it will matter. The phone simply has a limited appeal and isn't "cool" enough in terms of design to drum up interest. The fact that several models of the phone are sold out in the Google Store right now only indicates to me that Google just didn't make many of these phones. Suffice it to say that Samsung's loss is Apple's (NASDAQ:AAPL) gain right now, and Apple is going to have a home run quarter.
But long term, the interesting thing regarding the faults of the Pixel are that they are all easily fixable. Update the design, make it thinner, get rid of the chin, make it water proof, add wireless charging and make it a little less expensive. Done. Easy. Pixel 2 is going to be great. And all of the advantages of the Pixel will remain, including: integration with Chromecast, which the Echo cannot replicate and integration with Google Home, which Apple cannot replicate. Tying together the overall hardware system of phone, home assistant and TV with a powerful assistant that is connected to your email, phone, YouTube, pictures, search and browser is something that Apple and Amazon (NASDAQ:AMZN) can each replicate in part, but not in whole.
So while the Pixel 1 will likely be a dud, it will fail for some very easily fixable reasons. If Google cares about this, they will put in the investment on hardware design, because hardware is what gets people excited. And then show them what is possible with the Google Assistant. If they do that, the Pixel 2 will be a surprise hit.
Looking at the big picture, Google is trading at a forward P/E of under 20, has $75 billion of cash (plus equity in various other companies, including Uber (Private:UBER)), has unlimited growth opportunities internationally where it has three of the top 5 websites in nearly every country in the world, and has unlimited potential to develop a "personal" Google for billions of people. Yes, the Pixel 1 will be a dud, but the stock is a strong buy nonetheless.
Disclosure: I am/we are long GOOG.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.