As Samsung's market share grows, so too do tensions with Google

Posted:
in General Discussion edited January 2014
Google executives are concerned that Samsung's influence on Google's Android operating system is too strong, and the search giant is turning to its other Android partners in hopes of getting back some leverage on the South Korean conglomerate.

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The Wall Street Journal on Tuesday carried word that Google is concerned about Samsung's preeminence in the Android smartphone segment. Samsung, chief rival to Apple, accounts for about 40 percent of Android device sales.

Samsung shipped 215.8 million smartphones last year, most running Android. That figure accounted for 39.6 percent of the global smartphone market. In addition to its 40.2 percent share of Android-based smartphones, Samsung also manufactures about 27.9 percent of Android tablets on the market, up from 15.6 percent in 2011.

In terms of who is making money off smartphones, the picture is even more grim, with Apple and Samsung estimated to grab 106 percent of smartphone profits when taking into account losses by other manufacturers' mobile divisions.

Google executives, The Journal holds, worry that Samsung could use its position as the leading Android manufacturer to renegotiate its arrangement and eat into Google's mobile-ad business. With that in mind, the search giant is said to have met with other manufacturers at Mobile World Congress in Barcelona in the hopes that their devices could challenge Samsung.

Currently, Samsung receives more than 10 percent of the revenue Google generates from mobile search. The fear, according to reports, is that Samsung could demand a higher share of the online advertising revenue Google gets from Android devices.

Possibly worse, the company could "fork" Android ? much in the same way that Amazon has for its Kindle Fire line of devices ? and cut Google out of the equation entirely. Alternately, Samsung could shift its devices to its own operating system, dubbed Tizen, which features a limited degree of interoperability with existing Android apps.

Google, though, is not without recourse. Should its relationship with Samsung take a turn for the worse, the search company could increase its efforts to improve the standing of Motorola, which it bought last year for $12.5 billion. Already, Google is said to be working on a "game changing X Phone" within Motorola. Such a device, should it live up to the hype, would have the triply beneficial effect of reestablishing Motorola, further combating Apple, and balancing Samsung in the Android sector.
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Comments

  • Reply 1 of 27


    Maybe they've created a monster. Karma is a bitch. 

  • Reply 2 of 27


    The only way this would work is if they fork it in such a way they could work a deal with Amazon for their App Store. Otherwise, why bother? As we all know, ecosystem is the key. If there's no developer support they're just as DOA as the Blackberry and Windows Phone reboots. Is a consumer going to buy a frankenphone with Bing Search, Amazon Apps, ?? for maps...they'd be really stupid to. I don't think that's the issue, the issue is money, ad money. Would love to see them try and crash and burn though.

  • Reply 3 of 27
    quinneyquinney Posts: 2,521member
    Maybe they've created a monster. Karma is a bitch. 

    I heard a rumor that the new Googorola phone is going to be called "The Re-Animator".
  • Reply 4 of 27
    Things are getting more complex as Samsung is trying to distance itself from Google. Samsung just cannot stand watching Apple taking in huge profits even though Apple is way behind smartphone market share. News are coming out of Korea about Samsung installing their own version of iTunes on Galaxy S4 which will be revealed next month.(it might even be called 'GalTunes'...funny. Their new e-books store interface is 100% copy of iBooks by the way.)
    It's obvious Samsung is trying to copy Apple's ecosystem model because they want to make extra money with contents and software. But I believe Samsung will fail miserably in their attempts to copy Apple(and Google)'s ecosystem because they just don't know how to do software.
    Their new Tizen OS UI looks like cheap version of Firefox OS and I think Firefox and Ubuntu have better chance of eating into Android market share than Tizen.
  • Reply 5 of 27
    Samsung and Google deserve what they have created....a dogsh*t business model!
  • Reply 6 of 27
    r00fusr00fus Posts: 245member
    I'm thinking Samsung is a good problem for Google to have. They have created a monster, for sure, by not forcing Samsung to license their OS (Google services/trademark must be licensed, but still that's pennies compared to say, what Microsoft requires).

    Still, I'm guessing that with the ascendence of Android, Google is now "secure" as their search business isn't the only leg of their profits or future.

    It will be interesting to see what transpires. I don't think Samsung is willful enough to sacrifice their "first amongst equals" situation with Google, and I don't think Google is daring enough to simply bump off their biggest partner in the Android space (not sure what Moto is set to do these days).

    Perhaps this will become more of a WinTel relationship. Given the cultural differences, perhaps not.
  • Reply 7 of 27
    normmnormm Posts: 533member
    The only way this would work is if they fork it in such a way they could work a deal with Amazon for their App Store. Otherwise, why bother? As we all know, ecosystem is the key. If there's no developer support they're just as DOA as the Blackberry and Windows Phone reboots. Is a consumer going to buy a frankenphone with Bing Search, Amazon Apps, ?? for maps...they'd be really stupid to. I don't think that's the issue, the issue is money, ad money. Would love to see them try and crash and burn though.

    Samsung is about three times as profitable as Google, and growing rapidly as smartphones grow. In another year or two it might make sense for Samsung to simply buy Google.
  • Reply 8 of 27
    The only way this would work is if they fork it in such a way they could work a deal with Amazon for their App Store. Otherwise, why bother? As we all know, ecosystem is the key. If there's no developer support they're just as DOA as the Blackberry and Windows Phone reboots. Is a consumer going to buy a frankenphone with Bing Search, Amazon Apps, ?? for maps...they'd be really stupid to. I don't think that's the issue, the issue is money, ad money. Would love to see them try and crash and burn though.

    There are rumors that all this anti-Apple/pro-Samsung articles lately is a strategy. Look, we are seeing articles daily about how Samsung is the cool kid now, Samsung has the best this, etc. p

    Personally, I don't even thing Samsung has the best android phone out there. Maybe not even second best. But they are selling.

    Have you seen thr images of the S4? They clearly have a liberal copying attitude at Samsung. I would not be surprised at all if Tenzian 2.0 is a fork of Android.
  • Reply 9 of 27
    Haha.
  • Reply 10 of 27


    I hear Google has hardly done squat with Moto Mobility since they bought them.

  • Reply 11 of 27
    jragostajragosta Posts: 10,473member
    r00fus wrote: »
    I'm thinking Samsung is a good problem for Google to have. They have created a monster, for sure, by not forcing Samsung to license their OS (Google services/trademark must be licensed, but still that's pennies compared to say, what Microsoft requires)..

    I doubt if that would have worked. The entire appeal of Android was the fact that it was free. If Google had charged a significant amount for it, it's likely that it would not have grown at the rate it did.
    r00fus wrote: »
    Still, I'm guessing that with the ascendence of Android, Google is now "secure" as their search business isn't the only leg of their profits or future.

    Only one thing wrong with that - it's just not true.

    Google makes something like 97% of its profits from search. Everything else is peanuts.

    Android's entire purpose is to drive more business to Google Search.
  • Reply 12 of 27


    Another questionable piece from Wall Street Tabloid. Why would Samsung renegotiate for more profits? Both sides understand the strength of each other's hand, and I don't think the threat of Tizen is a strong hand. Google has the apps. Tizen doesn't. If Samsung really tried to sell Tizen phones instead of Android phones, I think they'd cede their market position pretty quickly. Google knows that.


     


    Quote:

    Originally Posted by pfisher View Post


    I hear Google has hardly done squat with Moto Mobility since they bought them.



     


    They used it to sue some competitors over FRAND patents. Didn't amount to much.


     


    Quote:

    Originally Posted by christopher126 View Post



    Samsung and Google deserve what they have created....a dogsh*t business model!


     


    Samsung's business model is to sell handsets, Google's is advertising (and increasingly, data mining their users). Not sure which is dogsh*t because they both seem to be making a profit.


     


    Quote:

    Originally Posted by Robin Huber View Post


    Maybe they've created a monster. Karma is a bitch. 



     


    I still don't think Samsung's hand is as powerful as Google's. One needs the other more than the other needs one.

  • Reply 13 of 27

    Quote:

    Originally Posted by thataveragejoe View Post


    The only way this would work . . .



    It is fantastic that you have examined all other possibilities of solutions to this new Samsung venture and it is impressive that you are willing to give your vast business and technical expertise to the readers of this humble forum when you obviously could sell your incredible services to Samsung for hundreds of thousands of dollars.

  • Reply 14 of 27
    512ke512ke Posts: 781member


    Things can change very quickly in this space.  Google has the apps.  Tizen doesn't.  Today.  A short while ago Android didn't have the apps, either.  It can all change rapidly.


     


    Look for Samsung to grow Tizen as Android's eventual replacement.  Samsung wants to be Apple.  You can't be Apple and create a unique valuable user experience if you've got exactly the same OS that every other manufacturer has.  Google will also want to kill off Samsung as soon as Google can grow its own branded phone business.  Google and Samsung are temporary partners on their brief honeymoon, in much the way that Apple and Google used to be honeymooning partners.


     


    But it won't last because ultimately every single company wants to own it all.

  • Reply 15 of 27
    If Samsung leaves Google high and dry because they won't give them enough of a services cut, I wouldn't be surprised if Amazon offered them a nice deal: more of a cut of ad, media, and app sales in exchange for being the default Apps for all of those things on Samsung Android handsets.

    That would be a disaster for Google.
  • Reply 16 of 27
    hill60hill60 Posts: 6,989member


    Android is "open", Samsung can do whatever they want with it, including exposing what a sham Android's "openness" is i.e. merely a marketing term.

  • Reply 17 of 27
    Hey Sergei, didn't you like this alliance with emperor palpatain?
  • Reply 18 of 27
    hftshfts Posts: 386member

    Quote:

    Originally Posted by hill60 View Post


    Android is "open", Samsung can do whatever they want with it, including exposing what a sham Android's "openness" is i.e. merely a marketing term.



    My exact thoughts. Just ask Acer what they think about this "openness".


    Google is nothing but an advertising company that data mines, and simply buys companies. Hell even its search algorithms are not their own.


    I am mystified why people think an advertising company can do software and hardware.


    Its like i should take up Ballet, even though i have no clue.

  • Reply 19 of 27
    asciiascii Posts: 5,941member


    Doesn't Google already have a phone - the Nexus 4?

  • Reply 20 of 27
    crowleycrowley Posts: 5,643member


    Open always wins.  


     


    /s

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