There was no shortage of storylines across technology last week. It's earnings season, which brings about huge booms and busts as companies either deliver on their expectations or take a step back. However, the biggest news emerging out of the tech world might be a fundamental reshaping of the mobile space. While the defining battle of the smartphone world so far has been Google's (Nasdaq: GOOG ) Android versus Apple (Nasdaq: AAPL ) , a couple of key Android players could be changing the mobile storyline.
Apple redraws the mobile map
Apple kicked off the week by delivering one of the most impressive earnings reports in recent memory. Apple has long been the most valuable technology company in the world, but now it also has the highest sales ($46 billion, versus No. 2 Samsung's $42 billion). Its addition, its profits last quarter ($13.1 billion) were also almost double the profits of the second most profitable tech company, Microsoft (Nasdaq: MSFT ) , which posted earnings of $6.6 billion last quarter.
Granted, Apple sees a huge lift in holiday sales, but the figures are still enormously impressive. However, with less fanfare, key Android partner Samsung delivered some stunning mobile growth figures of its own. The company posted a 54% sales jump in its mobile segment. While Samsung has stopped reporting on smartphone volumes, Asymco, a mobile blog known for its great data crunching, estimated that the company now accounts for 60% of Android phone volume.
The rapidly consolidating world of Android
For investors, the implication is clear: It's becoming less about Apple versus a team of Android competitors, and more about Apple versus Samsung in the smartphone space. The increasing tension between the two was first demonstrated in courtroom battles and has continued into more public sparring. Samsung is ponying up the $3.5 million to run a Super Bowl ad painting Apple fans as sheep neglecting a superior product. (Check it out at YouTube.)
Now that Apple's the big boy of the tech world, it's getting attacked with a game plan that's right out of its own playbook attacking Microsoft with its "Get a Mac" campaign.
The tablet wrinkle
However, while Samsung might be dominating the Android smartphone world, there's increasing evidence that its dominance in tablets is fading. While industry leaks had long painted Amazon.com's (Nasdaq: AMZN ) Kindle Fire as a success -- reports had put Amazon at producing 5 million through the end of 2011 -- industry researchers are starting to see concrete evidence of its success. Flurry, a company that specializes in analytics for mobile applications, notes that the Kindle Fire is now drawing 36% of Android tablet app use. That's up from just 3% in November and is equal to the total use of Samsung's Galaxy Tab, which was seeing 63% of Android tablet app usage just three months ago.
Give Amazon another six months of sales, and it'll have made Samsung irrelevant in the tablet space.
Options for Samsung?
There are many implications to the growing trend of Amazon's dominance of Android tablets and Samsung's establishing a huge market share in phones. However, most of the implications are bad for Google.
On the smartphone side, Samsung has hinted that it sees reliance on Android as a threat, which has led to broad rumors that it could make a bid for operating systems ranging from Hewlett-Packard's webOS to Research In Motion's (Nasdaq: RIMM ) BlackBerry OS. Samsung also continues developing its own operating system, Bada.
Samsung passed on webOS and has rebuffed reports of an interest in BlackBerry. In the end, its path forward is likely to be illuminated by Amazon, which heavily "forked" Android to create the operating system underlying Kindle Fire -- an operating system Amazon now controls. While this process cuts the companies out of certain native applications (like Maps or Google's Gmail client), it could give Samsung a path of self-determination in the Android space.
Do all roads lead to a struggling Google in the mobile space?
For Google, having such a reliance on one Android partner is a huge threat. There have been wild swings in Android market share, with Motorola and HTC both stepping up and stealing gobs of market share with heavily promoted phone releases. Google might have no choice but to favor -- in a blatant manner -- other handset makers to decrease Samsung's growing clout.
So whether by Samsung's own move -- predicated on its leeriness of Google's purchase of Motorola, a rival handset maker -- or by Google's pushing other handset makers to decrease its reliance on Samsung, it looks like relations between the two are on a path to conflict.
Of course, the winner of this course of events would be Apple. In-fighting and more fragmentation in the Android camp only strengthens Apple's hand. Another winner could be Amazon. While the company is seeing great success in tablets, the real prize of our mobile future is the smartphone market that should hit a billion units a year by 2015 (which could be two to three times the size of the PC market). Again, any in-fighting between Google and partners backing forked Android editions would give Amazon a clearer path to dominance in the Android smartphone space.
However the events unfold, 2012 could be the year that shapes the mobile landscape for the next decade. The key question underpinning the whole year is whether the Android alliance holds or keeps fragmenting and giving Apple's iOS a stronger hand.
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