Recent reports have indicated tensions could exist between Google and Samsung, but were downplayed by Google CFO and Senior Vice President Patrick Pichette as well as Samsung Mobile Chief JK Shin. Although their working relationship is probably amicable, I have to believe that there is a little uneasiness at Google. Consumers continue to buy Samsung Galaxy branded phones in droves. So much so that 40% of all Android phones sold are Samsung branded. In fact, Samsung has sold 200 million more phones than the next Android manufacturer.
On one hand, Google should be delighted in what Samsung has accomplished. Android is now a dominating mobile OS, and a big thanks has to go to Samsung for being a big part of that. On the other hand, it’s never a good idea for one entity to have such a large piece of the pie. Companies with too much power can dictate and give less choice to consumers. If Google had their choice, every manufacturer would be equally as successful, but unfortunately it doesn’t work that way in the real world.
Now I am not about to tell you that Samsung will become a dictator and start demanding a bigger piece of the revenue from Google, but Samsung is a corporation and ultimately they will make decisions that give them the most profit. There’s nothing wrong with that, it’s capitalism at its finest.
So how does Samsung’s dominance leave Google vulnerable? The bottomline is that 40% is a very powerful slice of the pie and represents a considerable amount of power. That power doesn’t mean they become the “Evil Empire”, but depending on what Samsung does in the future, it could have a major impact on Google and specifically Android. What would happen if Samsung were to leave Android? I know this idea has come up before and everyone assumes that since they are so successful with Android, they would never leave. It’s rather simple, corporations like to make more money, and if any Android manufacturer is in a position to leave, it’s Samsung.
Samsung has spent a considerable amount of money over the last few years creating a brand that is as powerful as Apple’s. At the same time, they have developed their own software features. All of these features are Samsung branded such as S Beam, AllShare, AirVIew, Smart Pause, and so on. I lost track, but I think Samsung unveiled at least 15 new features during the Galaxy S 4 event. Although Samsung phones utilize Android, you don’t see that word anywhere in their advertising. The only time you ever see “Android” is in press releases or when they need to tell you what version of Android a particular device is running. In fact, during the Galaxy S 4 Unpacked event, they only mentioned Android once for the entire 50 minutes. This is something that all Android manufacturers do because it’s their way of creating differentiation. By skinning Android, they make it “seem” like it’s their own OS. In Samsung’s case it’s TouchWiz that consumers know. Hardcore Android users know the difference, but do mainstream consumers? It’s unlikely that the average Galaxy S or Note buyer is concerned about Android or any other OS as long as the TouchWiz user experience is similar.
At the same time, TouchWiz is only the look. It’s the software features like S Beam, Smart Pause, etc. that are selling phones. The difference is Samsung does it better than anyone else. With all these proprietary features, they are able to create a brand similar to Apple’s. They even go so far as to make their own version of Google Translate. S Translate (unveiled last week) is actually inferior, but I guarantee you that the average consumer will soon know more about S Translate, and they are unlikely to ever know Google Translate is a better alternative.
So where does Samsung go if they leave Android? Well it certainly won’t be Windows Phone. Samsung won’t leave Android just to be in another situation where someone else is in control. All things point to Tizen for now, but it could be something entirely different. It’s no secret that Samsung will unveil their first Tizen-based phone this fall. The only issue Samsung has in leaving Android is app development, but at this point Samsung has the money to push development. They are already creating relationships with many top level developers from various contests they have held over the years. They even have their own branded app store that’s ready to go if needed.
The good news for Google is if Samsung were to leave, it won’t happen for a while. Additionally, since Google makes money with ads, it’s unlikely a Samsung departure would hurt them dramatically since Samsung would most likely continue to utilize some Google services other than the Play Store. Still, if Samsung were to take 40% of the Android user base with them, it would be a hard pill to swallow for Android as a whole. So what can Google do? They are already doing it actually. The purchase of Motorola last year was the first step in the process. It was never about the patents because Motorola was never all that successful with their patents against Apple. The second step was the poaching of Samsung’s VP of marketing, Brian Wallace because Google wants to build their brand and take back some control. They’re not looking to hurt other Android manufacturers, but at the same time, they don’t want to get hurt by other Android manufacturers. Google is just doing what every smart company does, and that is prepare for the worst. Samsung may never leave Android, but the strong possibility does exist, and it behooves Google to make moves that will lessen the blow if it ever happens. Should Google be wary of Samsung? You’re darn right they should. and I believe they are.