Can Alphabet Inc Recover From the Horrid Pixel 2 Launch?

The Pixel 2 XL launch is off to a rocky start that’s dragging GOOGL stock down

By Brad Moon, InvestorPlace Contributor

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Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google should be enjoying this moment. The company has just launched the highly anticipated follow-up to its Pixel smartphone. Rival Apple Inc. (NASDAQ:AAPL) is facing lower than expected iPhone 8 sales and production challenges as it prepares to launch the iPhone X.

Can Alphabet Inc Recover From the Horrid Pixel 2 Launch?
Source: Google

Now should be Google’s time to shine. Instead, it’s putting out fires. Reviews of the flagship Pixel XL 2 have been savaging its apparent poor display quality. To make matters worse, the vendor selling the Pixel 2 at Google pop-up shops has been overcharging customers.

It’s a lot of bad press at a time when Google was expecting to be basking in accolades and notching big sales numbers. Instead, in the two days since the reports of the Pixel XL 2’s display woes have been published, GOOGL stock has been down as much as 1.44%.

Pixel 2 XL Display Uses POLED

The Pixel 2 XL has an OLED display. Compared to a traditional LCD display — like that used in all iPhones up to and including the iPhone 8 — it’s thinner, supports curves, should be more power efficient and it should look a lot better. OLED displays produce much darker blacks than LCD can, leading to a much more vivid and visually appealing picture. They pop.

The Pixel 2 XL display should put the iPhone 8 Plus to shame. Instead, Google’s flagship smartphone is being described in reviews as having a display “that makes me scream every time I have to look at it.”

The problem is that with the Pixel 2 XL, Google went with a new OLED technology called POLED, from LG. It’s a new competitor in the smartphone space to Samsung Electronics Co Ltd (OTCMKTS:SSNLF), which used to be the sole supplier with its AMOLED displays. However, POLED is having some teething issues. LG’s own new flagship smartphone the LG V30 is equipped with the same POLED display and it’s being called out as a “deal-breaking flaw.

The complaints about the Pixel 2 XL display include a noticeable green or blue tint, washed out colors and graininess or patterns in solid colors.

The smaller Pixel 2 is not seeing these complaints. Why? It uses a Samsung AMOLED display.

Customers Being Overcharged at Pixel 2 Launch

Pixel 2 XL display issues are one thing, but Google is also shooting itself in the foot at the Pixel 2 launch. At least its launch partners are. Pop-up stores in New York and Los Angeles are selling the new Pixel phones, along with new Google hardware. They are being run by a Verizon Communications Inc. (NYSE:VZ) reseller, but are reportedly staffed by Google employees and customers get their purchase in a Google bag. The pop up stores have been charging an extra $30 on the price of all the Google Pixel 2 phones.

Technically, it’s not Google at fault here, but to customers, it looks very much like a Google snafu.

What Is Google Doing?

Hardware is a new big deal at Google. The company is rapidly expanding its hardware portfolio to reduce the dependence of GOOGL stock on ad revenue, as well as to ensure consumers continue to get easy access to Google services.

The Pixel 2 is the cornerstone in this effort.

So the company is scrambling to make sure the Pixel 2 XL display and overcharging don’t scuttle the Pixel 2 launch. Google is refunding the customers who were over-charged at pop up stores. That’s the easy one. It has also responded to complaints about the display and it looks as though a software fix might be in the works. A Google spokesperson told The Verge:

“We designed the Pixel display to have a more natural and accurate rendition of colors this year but we know some people prefer more vivid colors so we’ve added an option to boost colors by 10% for a more saturated display. We’re always looking at people’s responses to Pixel and we will look at adding more color options through a software update if we see a lot of feedback.”

Ultimately, Google may get this fixed — or at least minimized. Unfortunately, the bad press is hitting during a critical window. Apple’s iPhone 8 sales aren’t living up to expectations and the iPhone X hasn’t launched yet. Now is when Google should be selling its new flagship like hotcakes. Instead, it’s dealing with reviews that may frighten off potential buyers and dealing with complaints from some of those who took the plunge only to find they were overcharged.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/10/alphabet-inc-recover-from-horrid-pixel-2-launch/.

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