Increasing my Google investment $GOOGL

Increasing my Google investment $GOOGL

I’ve just increased my exposure to Google’s parent company, Alphabet, Inc ($GOOGL), but not in the way you might imagine.

As noted previously, I’ve been a shareholder in Alphabet since the summer. As someone who spends the majority of every day online, and runs a website, my usage of Google products was already at levels you might call “extreme”.

And I recently had an important decision to make. It’s a decision everybody has to make every few years: which mobile phone to buy?

Since around 2011/2012, I’ve been in the iPhone ecosystem.

The first I bought was the iPhone 4 (product release date 2010). Being a frugal person, I held on to it all the way through to late 2016, using two iterations of it (the first one was stolen from me, the second one was a refurbished model given to me by an insurance company).

By 2016, this phone had reached levels of speed which even I was unwilling to bear any longer. Apple ($AAPL) has admitted that it slows down older iPhones. It says this is necessary to preserve the battery, rather than a technique to incentivise people to buy their latest models.

I tried a Huawei phone, since I was living in China at the time, but it had some issues when I came back to the Western World (to do with Google’s position in China). So the Huawei phone had to be sold.

Continuing my track record of frugality, and returning to the comfort of the Apple ecosystem, I picked up a refurbished iPhone 5S (product release date 2013).

Something old, something new

A quick digression on the topic of refurbished goods. I just love how efficient they are, from an economic standpoint. If more of us were willing to go down that route, there would be far more savings in the economy!

For the sake of accepting a dent or a scratch, i.e. less than perfect cosmetics, you get some incredible value. You get products which have been expertly tested and whose parts are often brand new. I’ve heard that the heavy testing of refurbished products often means that they are more reliable than products which are fresh out of the factory!

Besides using refurbished phones, I’m typing this to you right now on a refurbished desktop with 16GB of RAM, three large screens and various other upgrades and add-ons, purchased at a bargain price because it’s a refurbished model. Some other company may have used it for a few years – so what?

If there is a risk in the process of buying used goods, it’s to do with selecting a vendor: you do need to find someone you can trust to do a very thorough refurbishment. The same could be said about buying used cars (another thing which I’ve been known to do, from time to time).

Anyway, my iPhone 5S put up a brave performance over the last three years. All credit to Apple: it continued updating this phone with the latest operating system (iOS 12), and only with the release of iOS 13  in September 2019 was the 5S finally left behind. The 5S spent six years at the cutting edge of Apple software: a great achievement by the phone itself and by Apple!

iPhone 6 users were less lucky. Along with 5S, they too were left behind by iOS 13.

A tricky decision

With my iPhone 5S struggling, six years after it had been originally released, I needed to decide what was next.

The problem was this:

  • I like how user-friendly iPhones are, and am used to them.
  • The iPhone 11 costs £700 (UK) or €800 (Ire.), which seems unnecessary for someone who doesn’t play demanding games or need the very latest tech on their phone for some other reason.
  • The iPhone XR is about £100/€100 less, but this is still difficult to justify for someone who mostly just needs to send emails, browse the internet, and use social media and messaging apps.

There were one or two other niggles for me with the latest crop of iPhones.

For example, the headphone jack has been abolished by many phone manufacturers, starting with Apple. I still use wired headphones, and wasn’t looking forward to switching to Bluetooth (or being forced to use a silly dongle).

Another problem was screen size: I was used to the 4-inch screen of the 5S. Don’t laugh – this phone was very convenient to carry, to use with one hand, and to make calls with (which was the original point of the thing, after all). The latest iPhones have 6.1 inch screens, which in my world is not the most convenient size.

Aesthetically, I had a problem with the notches on modern iPhones, preferring traditional bezels at the top and bottom of the screen (straight black lines).

And they’re heavy, too. The iPhone 11 weighs in at nearly 200 grams/7 ounces. While some people love the sturdy weight of glass and metal, I just see it as something else to carry around!

Googling the answer

I don’t want this article to get to long, so let me get to punchline: the answer to my problem was the Google Pixel 3A (release date 2019).

This currently costs £400 in the UK, but I was able to pick it up for €329 in the Black Friday sales.

So what’s so great about the 3A, I hear you ask?

Many things. Here’s the list:

Let’s revisit my Google investment thesis for a second. I own shares in Alphabet Inc. because Google is an extraordinary company with huge market share and market power in a variety of fields. One of these is the Android operating system used by 2.5 billion devices around the world.

A major strength for Apple has been the absolute harmony between the hardware and software of iPhones. When you buy an iPhone, you expect a seamless experience.

By contrast, my occasional experiences with Android devices in the distant past were far from enjoyable. The bloatware on a Samsung phone which I briefly tried was horrific. There was something “not quite right” about how the sofware ran, at least in comparison with the seamlessly smooth experience of an iPhone.

But this changes when Google takes on the hardware side of an Android phone. It can tweak its devices to match the software, and it can also tweak the software to match its devices.

Pixel phones run very smoothly, partly because they run the “clean” version of Google’s software, without any bloatware, which is known as Stock Android.

But also, it should be no surprise that the best company to make a phone run smoothly on Android is Android’s creator.

When using the 3A, I can understand why reviewers said that it was designed to target iPhone fans, i.e. people like me who want a phone that’s easy to use and simply gets the job done.

  • Price

Even putting Black Friday sales to one side, I still think that the Pixel 3A offers excellent value, in my view.

You don’t get face recognition or wireless charging, and you get a plastic phone instead of something made of glass. So you are missing out on some of the bells and whistles, that’s for sure.

But it’s not all bad. The plastic exterior means that it’s very light – should that really be considered a disadvantage?

And you get a fingerprint sensor on the back of the phone, instead of facial recognition. I’m not 100% convinced I want my phone looking at me all the time, so this unlocking method seems perfectly fine. The sensor reacts very, very quickly to the fingerprint.

Google has promised to support this phone with software updates for three years, so buying it in late 2019/2020 should hopefully allow for several years of use without any problems.

  • Headphone jack

This is a budget/midrange phone, and Google knows that the people who buy in this category are not the AirPod crowd. So we get our beloved headphone jack back.

  • Fast charging/battery

The phone comes with an 18W fast charger, and battery life with the 3000 mAh (milliamp) battery is excellent so far. For someone who has just moved on from a dying iPhone, it’s a godsend.

The lower price point for the phone was achieved by putting a slower processor in it than flagship models get. This is actually a good thing from a battery perspective. The lower demands on the battery by this slightly slower processor will help to get you through a full day with your 3A.

Note that if you want an even bigger battery which will last a day and a half, you need the larger version of the phone: the 3A XL.

  • Size/Screen

The standard version of the 3A has a 5.6 inch screen, which is perfect for me. If you really want a bigger screen, along with the bigger battery, you can get the XL version.

The screen has an OLED display, which is something not even the iPhone 11 can boast. It’s hard to put the benefit of this into words, but an OLED screen gives you a better black than any other type of screen – instead of showing you the colour black, that part of the display which is black is simply off. Besides looking very nice, this has the advantage that you can have an “always-on” display without destroying battery life.

  • Camera

I haven’t had a good chance to use the camera yet, but I’m reliably assured that this phone can’t be beaten when it comes to the quality of the still images it takes, not even by flagship iPhones. Setting the Pixel apart is the world-beating artificial intelligence which Google uses to recognise what it’s looking at and make your pictures look amazing.

In researching this decision, I watched more than my fair share of YouTube videos on the subject. The consensus view was that the 3A is an excellent, if not the best, midrange phone in today’s market. For example, this reviewer thinks that the 3A is “the only phone most people should buy“. Other reviewers said very similar things about its suitability for the vast majority of people.

Conclusions

As an Alphabet shareholder, I need to be careful not to let my biases run out of control. But I am genuinely blown away by the Pixel 3A experience.

It’s possible that other phones would have blown me away, too, after so many years using a much older phone. But many of the alternatives would have cost double the price. This one didn’t.

I also need to bear in mind that the brilliance of the 3A (and 3A XL) doesn’t mean that Google has “cracked” the phone market.

For example, the latest flagship Pixel 4 has been panned by critics. It only has a 2800 mAh (MilliAmp) battery. Since the 4 has a more advanced processor, it burns through this battery extremely rapidly, i.e. in less than a day.

The 4 is also limited to 64GB or 128GB of storage (the 3A offers 64GB only). For a flagship, high-priced phone, this is not competitive in 2019.

So Google still has a few things to work on, before it can compete with Apple and Samsung in the flagship phone category.

For now, it has a very competitive mid-range phone offering. The company’s phone sales already received a massive boost from the 3A. Perhaps this can be repeated next year if it launches a cheaper version of the 4, i.e. the 4A?

The entire phone manufacturing industry, including Samsung and Apple, needs to be careful. This is a competitor with a unique software advantage.

 

The author has a long position in $GOOGL.

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    Hi Graham, thoughtful piece – thank you.  Where did you pick up your refurb desktop?

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