Pixel phones to bring in $4bn revenue for Google next year, says Morgan Stanley

Google's new Pixel series phones will generate as much as $3.8bn (£3bn) in revenue next year, according to estimates by Morgan Stanley.

The internet giant is expected to sell about five to six million units of Pixel phones including the 5in Pixel and 5.5in Pixel XL, costing £599 and £719 respectively, in 2017.

Morgan Stanley predicts that Google will sell three million Pixel devices between October and December, adding $2bn revenue, according to a research note, a copy of which was obtained by Business Insider.

Apple, in comparison, has sold 212 million iPhones in the 2016 financial year, adding $137bn to its total revenue. In the third quarter that began in July and ended in September, the Cupertino tech major sold 45.5 million iPhones, which accounted for revenue of $28bn.

The Pixel will be half as profitable for Google as the iPhone is to Apple. Pixel devices will generate 22% to 25% gross profit. The research note states apart from Pixel phones, Google will profit from "Android user monetisation."

While consumers spend three times more money on iOS apps than Android, some Pixel features would help close the gap.

The Google Assistant, camera, Daydream (Google's virtual reality headset) and deeper app integration with smartphones along with improved computing power are a few of the features that would prompt consumers to spend money on Android, states the research note. These features could help Pixel phones drive mobile search monetisation for Google.