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Google officially unveils $649 Pixel phone with unlimited storage; $129 Google Home

Google unveiled a new high-end smartphone, Pixel, on Tuesday.

The phone starts at $649 and is available for preorder on Tuesday in the U.S., Canada, Germany and the U.K., the company said. Owners of the phone will get free unlimited storage for photos and videos at original quality.

It's the first phone made by Google "inside and out," the company said, and is part of an exclusive partnership with Verizon.

Rick Osterloh, senior vice president of hardware at Google, introduces the Pixel Phone by Google during the presentation of new Google hardware in San Francisco, Oct. 4, 2016
Beck Diefenbach | Reuters
Rick Osterloh, senior vice president of hardware at Google, introduces the Pixel Phone by Google during the presentation of new Google hardware in San Francisco, Oct. 4, 2016

Google believes that the next opportunity is building hardware and software together to empower artificial intelligence, an executive said at the event — a shift in strategy that aims directly at rival Apple.

They're in the hardware game for the long run, Rick Osterloh, senior vice president of hardware at Google, said at the event.

"Since I joined Google, one of the questions I get asked most often is, 'Why should we build hardware?'" Osterloh said. "We often joke that building hardware is, well, hard. People have strong emotional connections to the products they use every day. They are an important part of people's lives ... this is the right time to be focused on hardware and software."

The phones have smartphone cameras that were scored higher than the iPhone 7, according to third-party research cited by Google. It has a 12.3-megapixel rear-facing camera and big aperture, and comes along with software that selects from bursts of images and merges pictures in low light.

On the outside, it has a combination of aluminum and glass, an OLED display, a fingerprint sensor, a headphone jack and a USB-C charger. It's available in black, silver and blue.

Inside, it sports 32 GB or 128 GB of storage. The Pixel also charges up to seven hours of power within 15 minutes, installs software updates in the background and has live customer care built in.

In not-so-subtle terms, ‎Sabrina Ellis, director of product management at Google, also demonstrated how to transfer over data from Apple's iOS to Pixel.

The Pixel is the first phone with the Google Assistant, Osterloh said, as the company prepares for an "AI-first world." The phone is also made for virtual reality.

The company was largely expected to announce new handsets, and shares of Alphabet stock were flat during the event. Ahead of the event, Bloomberg reported that Google would unveil the Pixel and larger Pixel XL, two new smartphones that were conceptualized, designed, engineered and tested in-house.

In the past, Google has relied on co-branding efforts with its Nexus devices, which it does not have plans to continue, according the The Verge. But the Pixel, Bloomberg's Mark Gurman reported, is assembled by HTC in an approach "no different than Apple's partnership with iPhone builder Foxconn."

Tuesday's event revealed how the software will interact with hardware, where Google has traditionally been less focused than rivals like Apple. But during the company's July earnings announcement, Pichai made it clear that mobile is key to Google's future.

"Our investment in mobile now underlines everything that we do today," Pichai said.

Google Home and other devices

Mario Queiroz introduces the Google Home device during the presentation of new Google hardware in San Francisco, Oct. 4, 2016.
Beck Diefenbach | Reuters
Mario Queiroz introduces the Google Home device during the presentation of new Google hardware in San Francisco, Oct. 4, 2016.

Google also divulged more details on Tuesday of a highly anticipated smart home device, Google Home, that pits the company against Amazon's $180 Alexa.

The $129 Google Home device is available for preorder Tuesday and ships Nov. 4, and comes in several colors and with a six-month YouTube Red subscription.

"Our mission has always been to organize the world's information," said Rishi Chandra, a vice president at Google. "Over the past few years we've gone beyond the 10 blue links into providing direct answers to your questions. ... Now, with Google Home, we give you an easy way to access the knowledge of Google in a hands-free way."

The device plays YouTube Music, and of course, Google Play Music as well the Spotify, Pandora and iHeart Radio offerings that Amazon's Alexa has. Other features include a shopping list and morning agenda briefing.

Google Home, which has connectivity to other smart home devices like Nest and Chromecast, comes as voice is becoming the standard way to interact devices, Chandra said.

The company also announced a new virtual reality headset that connects wirelessly with the phone and connects to YouTube and Google Street View. The Daydream View headset, made of fabric, comes in slate, crimson and snow.

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Source: Google
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The $79 headset will feature a virtual reality experience of J.K. Rowling's "Fantastic Beasts and Where to Find Them," Google said. Daydream View will also support educational programs, and will go on sale in November.

Next, the company announced a Google Wi-Fi router, starting at $129 to ship in December. It is designed to be "visually subtle" and set for automatically optimizing your Wi-Fi network. It also comes with a companion app.

Also new from Google was a new version of its $69 streaming device, Chromecast Ultra, that will support new content from Google Play Movies that is four times better than standard high definition.

Google's strategy

The products may reveal how the company's artificial intelligence software push will reflect on its hardware. Hiroshi Lockheimer, a senior vice president at Google, positioned Tuesday's Twitter event as a potential turning point for the company.

The core division of Alphabet, Google's vast advertising and search business has expanded over the past decade to include the Android mobile operating system and app store, as well as cloud computing and products like YouTube and Chromebooks.

More recently, Google CEO Sundar Pichai has set his sights on artificial intelligence as the next inflection point of the company.

"We think of this as building each user their own individual Google," Pichai said at the annual Code Conference earlier this year. "Google does a lot of things, but if you peel away everything and you distill it, this is the heart of what we do. It's what we are about."

That strategy shift was already reflected in this year's Google developer conference, where the company unveiled a virtual reality platform and an artificially intelligent, voice-activated assistant that works across devices like Google Home, as well as new mobile apps.

— Reporting by CNBC's Mary Catherine Wellons, Megan Hawkins, Arjun Kharpal and Harriet Taylor.

Disclosure: CNBC is a launch partner for the Google Assistant app.