According to reports floating around in the Wall Street Journal, Samsung's dominance in the mobile space has Google running scared. And so it should.
As of the first quarter of 2012, Samsung became the numero uno mobile phone manufacturer in the world. In countries all over the world, Galaxy is synonymous with Android. It's a poignant sign that even on Giz UK, the third most-used Android handset is a Galaxy S II -- that's a phone that was launched in 2011, still beating out the high-end flagship handsets from the likes of HTC and LG.
So what? It's great for Google, right? Android, its baby, is getting more market share, and with it Google sees more ad revenue and increased profits from the Play Store. It's undeniable that in the short-run, Samsung's dominance of the Android market (and, increasingly, the mobile market as a whole) is a boon for Google. But the long-term consequences are slightly more frightening for the Goog.
The situation -- of old buddies becoming frenemies -- is nothing new. It happened with Asus and Dell, where Asus took over the manufacturing side of Dell's business, and eventually launched its own rival line of computers. It happened with IBM and Microsoft, and most recently, Apple and Google had to go their separate ways. In all these cases, it's a desire for expansion that drives the breakup of a previously successful partnership. In the Apple Maps case, for example, Apple reckoned it could make more money off an in-house mapping program, so dropped Google Maps at the end user's expense.
Samsung could quite easily find itself in a similar position. If the day comes that Android, Samsung and Touchwiz become synonymous -- and, at the current rate, that can't be far away -- Samsung will have an immense amount of leverage over Google. On every Android-powered device Samsung makes, it's forfeiting ad revenue and app-sale cash that a home-brew OS could bring in.
That makes for an uneasy relationship -- if Samsung was to think that Google's freeloading on its success, it would be easy to see malcontent brewing in the relationship. In an ideal world, you'd imagine that Samsung would want a slice of the Android money pie, and quite possibly a decent amount of design input into Android -- perhaps baking in some of the Touchwiz and Samsung-specific features into stock Android.
And if the current trend continues, Samsung will soon be in a position to demand whatever it wants from Google. Between 2011 and 2012, Sammy exactly doubled its share of the Android market -- from 23 per cent to a whopping 46 -- and the meteoric rise shows no sign of slowing down. Other manufacturers find it difficult to sell when the Galaxy's the big name -- even in phone shops, where a recent survey pegged the Galaxy SIII as the device most likely to be recommended to you in 6 out of 8 phone shops.
Imagine Samsung threatening to abandon the Android OS for, ooh, that new OS it's developing. It'd have Google over a barrel, and be able to demand pretty much whatever it wanted.
This isn't really news for Google. It's quite clearly looking to correct the inequalities in the Android marketspace -- buying up Motorola, spreading this year's Nexus love to LG, and moreover selling the Nexus 4 at what must be close to a loss. It's fighting tooth-and-nail to promote other brands, whilst still tacitly supporting Samsung. It's a weird situation, and one that I doubt can last for too long.
The problem for Google is that no other manufacturer really has the might of Samsung. The Samsung Group accounts for one-fifth of the total exports of South Korea, and it's got its fingers in every pie going, from ship-building to life insurance and parts for Rolls-Royce engines. Samsung manufactures the parts for most of its own devices, which gives it good control over the supply line, and allows it to go from drawing board to on the shelf in a time-frame that other manufacturers find impossible. It burns through R&D budget like a meth addict through the offie's finest solvents -- one in four of the company's 220,000 employees work in research.
Sadly, I think Google's campaign to tame the might of Samsung is in vain. Samsung has much greater brand awareness (and possibly brand loyalty) than Google, and it's certainly got the technological might to match Google blow for blow. Samsung Mobile is Google's Frankenstein monster -- a wonderful creation, and a great idea at the time, but now threatening to wrest control of Android from Google. The battle of the next few years isn't going to be Apple vs Samsung -- competitors will always fight, and generally, no-one's ever going to win hands-down. Rather, Android's internal power struggles are the ones to watch.
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