Ben Thompson of
https://stratechery.com/ on his podcast, has a great episode (see link below) explaining what Google is trying to do with the pixel. First before explaining you have to understand some background. Google (not Android) is a company that made its money by being a horizontal structured company with almost no variable costs. It costs the same amount of money to do ads for 1 million devices, 10 million, 100 million, etc. Thus marketshare and data are the most important things for Google to makes lots of money, for it does not matter who makes your phone devices, it does not matter what OS the device used as long as they were using google homepage, and google apps and thus were being served google ads, and google was also getting all of this data.
Thus it was not in Google's interest to have an Android vs Apple war.
Now Google did not create Android, instead they bought a company 2 years prior to the first iphone being shipped which was Android, and they then used Android to push Google Services. The bad thing happened was sibling rivalry. The sibling (Android) did not understand do not piss off your other sibling (iOS) for Google wanted both to thrive. Thus in 2010 we had a counterproductive war where Android announced they were at war with Apple (this was the time of the HTC Thunderbolt, announcing Honeycomb, etc, aka late Android 2.3 to Android 3.0). 2 years later Apple swapped to Apple Maps, and removing Youtube from being preinstalled (instead an app in the appstore). Apple did this for they felt they needed a backup in case Google went total war on them, and some shots were pre-emptively fired such as not having turn by turn directions on iPhones but did having them on the Google Maps App for Android. (Aka Android Apps had more features than iOS apps if the app was made by Google)
Now this is not saying these other services made by Apple are good or that the google services are better. What did occur was that Apple was now denying Google of all this valuable data, and possible ad sales for no real reason. Google the parent company does not want a marketshare war between Android and iOS.
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But in 2016 all of this is different. This is because the Google of the web years, and the mobile years made money by selling visual ads. You had to be looking at a computer or visual screen. This is different in an assistant market / ai market which can be voice in how the computer gives the user data, or is visual but we are talking very short amount of information. Getting the 1st response being the desired response is a whole lot more important for this type of way of using your device and you can't just slip advertisements into it.
Thus you need to make money some other way. Pretty much some form of subscription service, some form of fee service like a credit card (he does not really address this), or selling premium devices with large margins, aka similar to what Apple does.
http://exponent.fm/episode-091-googles-new-business-model/
So you need to think of the Pixel devices as not Android devices or Nexus. The Nexus was supposed to be the high end android devices, while with the pixel you are getting a device that is running Android but everything is about the Assistant. The Assistant is what separate your $650+ phone from other $650 phones. The assistant is also why you pay $650 for a Google Pixel vs a similar other high end phone that may cost $400 or $450.
Put another way the Pixel Phone is the transition device from the Google of 2009 to 2016 to the new AI focused Google that starts today, but really does not become the main focus of Google till some year in the future lets say 2020. The Pixel Phone is Google attempt to switch to another type of revenue structure.