Will Google and Samsung End Up Frenemies?

Depending on who you ask, the reason people love the Samsung Galaxy S4 is because it features the power of Google's (NASDAQ: GOOGL  ) Android OS; or the one factor holding Samsung back is the fact that it features an undifferentiated OS like Android. As the manufacturer of the single best selling line of Android devices, Samsung is positioning itself to have an increasingly persuasive voice with Google. This is even more notable when you consider that at the recent release party that Samsung threw for the Galaxy S4, Android was not mentioned.

Furthermore, Samsung is developing its own ecosystem that may position it to more directly compete with Google. This development becomes harder to overlook when you consider the steps Samsung is taking to bring its own OS -- Tizen -- to market with Intel chips. Ultimately, as good a partner as Samsung has been, these two are on a collision course to conflict.

Ecosystems are the new driving force
While there has always been an inexorable connection between software and hardware, Apple (NASDAQ: AAPL  ) has created and executed the current paradigm for consumer electronics with its iOS ecosystem. Going back to the 2012 Consumer Electronics Show, CNET's Matthew Moskovciak wrote:

The "ecosystem" concept started bubbling up last year at CES. Back then, companies like Samsung and Vizio were talking about creating tablets that talked to their TVs and app stores that could integrate their mobile devices into the entire living room full of devices. Apple is the model, of course, having already closed the loop on what Steve Jobs originally dubbed the "digital hub" back in 2001.

Apple created the model that everyone else is chasing, and it defines some of the critical battle lines between Samsung and Google.

Similar to Apple's iOS ecosystem, Google's Android is well established. The Samsung foray into this space is less developed, but is growing rapidly. Specifically designed Samsung Apps allow users to manage their media files between various Samsung devices, and, while they can be accessed by other Samsung devices, they are not accessible on other Android devices . As the company describes it: "The Samsung Media Hub app brings all-star entertainment to the Galaxy S smartphones and the Galaxy Tab. The app is preloaded on your device so you can instantly enjoy a diverse selection of movies and TV shows that start playing while they download."

Samsung has been slowly testing the waters, including the Media Hub on devices to get users accustomed to using multiple platforms with their devices. This has given the company an unusual ability to work inside an already established ecosystem. These closed environments are extremely difficult to break into -- unless you are invited in through the front door. So the seeds of a frenemy-ship are sown.

A new operating system
Samsung recently announced that by August it may release a new smartphone that works on its open source operating system called Tizen. The premium device planned for release at the end of the summer will give developers even more control in writing software to utilize the new platform. It is the result of a collaboration of several hardware manufacturers including Huawei Technologies, China's largest manufacturer of telecommunications equipment.

Many see the move by Samsung as a direct response to Google's purchase of Motorola Mobility for $12 billion. This move was viewed as a precautionary response to the nearly 40% market share achieved by Samsung devices, making it the largest manufacturer of Android products by a significant margin. 96% of Samsung's sales come from Android-based devices, meaning that the Tizen response is a safety measure taken to protect against a safety measure. This is how true frenemies distrustfully work together.

Even Samsung, however, realizes that the move is a risk that could sour the relationship. If Google becomes the single dominate player in the market place -- think Mr. Softy and Windows -- the less-than-friendly move might sting Samsung in the end. Even with Android gobbling up market share, it is hard to imagine a world where iOS loses relevance. As long as consumers are willing to accept multiple OS alternatives, the move seems a sensible one by the South Korean firm.

Shifting loyalties

As we have seen from huge patent cases between technology firms with ongoing supplier relationships, many companies in the space openly fight with one another and simultaneously relying on each other's products. Battle lines between operating system, ecosystems, and hardware make Samsung and Google very probable frenemies that, at least for now, are much better as a team in the smartphone and tablet spaces than they are on their own. Each have independent business lines that make them formidable opponents, but as these titans dance with each other for dominant position, both remain strong in the industry.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.


Read/Post Comments (2) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 20, 2013, at 8:50 PM, applefan1 wrote:

    Looks like Samsung's making a LOT of frenemies.

  • Report this Comment On March 20, 2013, at 10:16 PM, TruthBToldByMe wrote:

    The carriers are a whiney bunch aren't they? Carriers get their money back on IPhone subsidies in less than 5 months on a 2 year contract because IPhone buyers are better informed and have more disposable income. The Android platform is so fragmented each OEM has it's own flavor to try and distinguish itself from the rest. The only Android winner is Samsung and the market share numbers you so easily throw out to minimize IOS are all bogus and speculation since no Android OEM not even Samsung reveals actual sales. The only relevant numbers come from the carriers themselves and they show 70% IPhone sales to 20% all other Android OEM's. I suggest you do a little more research and get to the real meat of the issue. I look forward to your article on Samsung moving to the Tizen OS after they dump Google's Android because they copied Apple in every way and finally were forced to pay for their actions.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2323177, ~/Articles/ArticleHandler.aspx, 10/23/2014 5:24:06 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement