On the surface, it looks like Samsung and Google must be good friends. According to IDC, Samsung is the world’s number one maker of smartphones running on Google’s Android OS, owning 40.2 percent of the market in the fourth quarter of 2012. Of the 215.8 million smartphones Samsung shipped last year, almost all of them were Android devices. For comparison, Apple shipped 136.8 million iPhones.
When it comes to Android-based tablets, Samsung took 27.9 percent of the market in the fourth quarter of 2012, ahead of Amazon which had 21.8 percent. But even though they’ve each bolstered the other’s success, the two companies aren’t as tight as they might seem. According to the Wall Street Journal, a source inside Google says that Senior VP of Mobile Andy Rubin is wary of Samsung gaining a singular popularity over other Android manufacturers.
Other sources say Google fears Samsung will use its success to ask for a bigger share of the online advertising revenue which Google gets from searches performed on Android. They also say Google is wary that Samsung might either break away from or use its own fork of Android and devoid Google of any advertising revenue from its devices, which is a significant number at this point. Samsung might already be testing the waters for its own mobile OS push; they’ve announced that they will start selling Tizen based smartphones later this year.
Tizen is an open source mobile OS which is backed by Samsung and Intel. Samsung’s focus on Tizen became clearer when it announced in February that it would fold Bada, its inhouse mobile OS, into Tizen. Besides Tizen, it would also be possible for Samsung to develop its own version of Android. Implementing a Google-less Android has already been proven possible by Amazon, which uses its own fork of Android to power its Kindle Fire tablets. Because none of Google’s apps are installed by default on Amazon’s tablets, the Kindle Fire tablets don’t provide Google with the kind of advertising revenue they’d normally get from Android installs.
But why would Samsung risk sundering a profitable partnership with Google? Even though Samsung is already the world’ s largest mobile phone maker, it doesn’t make as much in profit as its closest competitor Apple. For the 2012 fiscal year, Apple reported a profit of US $ 41.66 billion, while Samsung came in at US$ 27.18 billion. One can imagine that Samsung sees the opportunity in owning its own integrated stack like Apple. Apps and multimedia downloads can bring in significant revenue; Apple reported in early 2013 that the iTunes Music Store had sold more than 25 billion songs while the App Store had over 40 billion downloads.
And of course, Samsung’s diversification might also be a defensive move; ever since Google purchased Motorola Mobility in 2012, rumors have been rife that Google will come out with its own Android devices and push into the mobile hardware business for themselves. While Google has denied that it will release its own Motorola-made Android flagship device, it’s become clearer that they have something in the works.
Google’s Chief Financial Officer recently said that when it comes to Motorola, “since day one, we’ve started working on the next agenda and we see that kind of pipeline showing up,” and “our own kind of work is actually quite promising.” At the moment, it seems like the two companies need each other, but there is one last number to be mentioned. While Samsung might not have made as much profit as Apple in 2012, it made nearly three times as much as Google, which reported a profit of US$ 10.74 million. With that much clout,
it’s no stretch of the imagination to think both sides might be open to options outside of their current relationship should things turn sour – after all, no one ever said they were going to be exclusive.
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