I watched the first half of Google’s product announcement today (October 4, 2016) before heading to a meeting. As many expected, Google announced two versions of their new Pixel phones. Pricing is “premium”, which is to say that the entry level model costs $649. While I am not the type of consumer that shops in this price range, I do think that Google’s pricing is more competitive than people initially realize.

The reason for this is that Google is including unlimited photo and video storage. Apple gives users 5 GB of iCloud storage, and prices go up pretty steeply from there. At approximately 375 MB per minute for 4k video, that space can add up quickly. One hour’s worth of 4k video use over 20 GB of space. Keeping ten hours of video puts you into the 1 TB plan, which costs about $120 per year. The next (and highest) tier is  currently 2 TB, which costs about $240 per year.

I don’t think that the Pixel phones will be a huge threat to the iPhone in the short term. Apple’s customers do not seem to be particularly sensitive to price. However, there are no doubt a number of high-end consumers who will find Google’s Pixel phones to be compelling for a variety of reasons. Fast charging, free online storage, a headphone jack, project Fi – there are clearly some features that positively distinguish the Pixel from the iPhone. By positioning the Pixel as a premium phone, Google may start to poach some of these high-end users.