Is Samsung Preparing to Fork Google's Android?

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Like Apple (NASDAQ: AAPL  ) , Samsung (NASDAQOTH: SSNLF  ) relies on sales of mobile hardware for much of its revenue and profit -- but unlike Apple, it doesn't own the operating system powering most of these devices.

It might one day -- sort of. Samsung is increasingly taking steps to differentiate its products from other devices running Google's (NASDAQ: GOOGL  ) Android: pushing exclusive apps, partnering with other software developers, and building a hardware ecosystem. In time, Samsung's dominance of Android could prove problematic for Google.

Samsung's big problem
Samsung has a problem of its own -- customer retention. Apple's customers are famously loyal: A recent study from Consumer Intelligence Research Partners, or CIRP, found that 81% of iPhone owners stayed with Apple when it came time to upgrade. Users of Android are less loyal in general (only 68% in CIRP's study stayed), but Samsung has even more reason to be concerned.

Because Apple controls its operating system, its phones are the only option when it comes to iOS. Users who have poured hundreds (perhaps thousands) of dollars into Apple's ecosystem on books, music, movies and apps is essentially stuck. Sure, they could make the switch to Android, but bringing their media with them would be a pain, and the apps they bought for their old iPhone wouldn't carry over.

Samsung doesn't have this luxury. A customer who pours money into Google's app store, Google Play, is loyal to Google -- not Samsung. Someone with Samsung's Galaxy S3 today could upgrade to an HTC One tomorrow.

The first Samsung Developer Conference
To counteract that possibility, Samsung is slowly building its own ecosystem on top of Google's, blending hardware compatibility with software exclusivity. Samsung offers its own apps to compete with Google's, and then uses its hardware to encourage their use. Samsung's native email app, for example, might not be as good as Google's version, but only Samsung's app works with the S-pen, its smart stylus.

Then there are Samsung's deals with other developers: Dropbox gives 50 GB of free cloud storage to owners of most newer Samsung handsets -- discouraging them from relying on Google's competing product, Drive. Twitter's new Android-tablet app, is a Samsung exclusive (for the time being).

More deals could be on the horizon. Sunday marks the start of Samsung's Developer Conference, a first for the company. Both Apple and Google use these conferences to encourage developers to take advantage of their platforms; Samsung's decision to host its own suggests a focus on software going forward.

The Galaxy Gear lock-in
And while it works to court developers, Samsung is already flexing its hardware muscle. Its new Galaxy Gear smartwatch requires an Android handset to function -- but not just any phone running Google's operating system will do.

Right now, the Galaxy Gear only works with Samsung's Galaxy Note 3. Soon, owners of other Galaxy handsets will be able to use the Gear, and Samsung has said it plans to bring compatibility to phones made by other manufacturers, but it isn't clear how that would work. To put apps on the Gear, you need to use Samsung's own app store, which isn't available on Google Play.

The Galaxy Gear could be just the first in a long-line of devices. Based on a recent patent filing, Samsung appears to be working on an alternative to Google Glass -- other wearables could follow.

Perhaps that's why Google is pushing back. Various reports have suggested that Google is about to unveil its own smartwatch, a likely possibility given that Google acquired smartwatch-maker WIMM Labs last year. When Google unveils its device, it will compete with Samsung's offering, but will likely work with nearly any Android handset.

Is Google's mobile strategy in danger?
The danger to Google is that Samsung could, at some future date, decide to completely fork Android -- removing Google's apps and services in place of its own. That would be a crushing blow to Google's mobile strategy, as the search giant gives Android away for free in the hopes that it will encourage mobile use of its apps and Web services.

Nevertheless, Samsung has to do something. It's the dominant Android-handset maker now, but that might not always be the case -- unlike Apple, it doesn't have the luxury of having a monopoly on the production of Android handsets.

Apple could be the one to undermine its iPhone business
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Read/Post Comments (10) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On October 27, 2013, at 2:31 PM, nicktaste wrote:

    samsung manufactures the cpu used in all iphone, ipad, apple tv since day 1 as well as other components

    samsung makes money on every iphone, ipad, apple tv sold

  • Report this Comment On October 27, 2013, at 2:55 PM, CrazyDocAl wrote:

    Unless Google can turn Motorola around they will have to play nice with Samsung. They make it sound like having your own OS is a good thing. People like choices, not simply 5s or 5c choices but real choices.

    If they know Android they have multiple excellent brands to choose from. That forces competition and real innovation. It also allows people to pick what's most important to them.

  • Report this Comment On October 27, 2013, at 3:01 PM, PhillipDeCooch wrote:

    I doubt Samsung would fork Android. Maintaining a OS takes a lot of resources and support. If their fork was not updated as often or as well as Android was, they would lose consumer interest and risk the dominance they have. If anything, they will move to a new OS like Tizen which they have invested a lot of money and time into.

  • Report this Comment On October 27, 2013, at 3:12 PM, livewire90210 wrote:

    Uh, the chip running Apple products is a Samsung creation.

  • Report this Comment On October 27, 2013, at 3:59 PM, mziggy wrote:

    I'm not much of a Samsung phone fan. Their Sense UI is crap and reminds me of a cartoon-y phone for a kid. It just doesn't look good. Add the fact they keep producing their phones in plastic ploymer unlike the competitors who are using metal/glass casings. They may be innovating with certain features, but I can do everything the S4 can do on my Nexus 4 with Tasker and Secure Settings. I have no confidence in Tizen at all. They could be making a BIG mistake moving to their own UI alienating themselves because many people are very loyal to Android, not just Samsung. I think moving to better material casing and a better, smoother, less resource hogging UI is just fine. As stated, they produce many of the processors in most of the competitions units. They should be more worried about Intel breaking into the tablet/smart phone scene now with their fanless Haswell processors. Personally, I'd much rather be using a haswell processor then Samsung, but that's just me.

  • Report this Comment On October 27, 2013, at 4:14 PM, marv08 wrote:

    @livewire90210: No, the chip running Apple's iOS products is an Apple creation, Samsung is only the fab manufacturing them.

    @PhillipDeCooch: "Maintaining a OS takes a lot of resources and support. If their fork was not updated as often or as well as Android was, they would lose consumer interest and risk the dominance they have. If anything, they will move to a new OS like Tizen which they have invested a lot of money and time into.

    Well, if they can create an own OS (like Bada and now Tizen), and if even Amazon, not a software company by any means, can maintain an Android fork... then Samsung can do that, too. (No idea if they intend to though.) And timely updates are not really one of Android's strength, the vast majority of users (other than those using Nexus devices and the most expensive flagship devices) can't update their devices at all. Samsung could not really do much worse.

    The real threat for Google is that Samsung could easily "steal" the majority of Android developers. Once Samsung would fork Android, they would instantly become the number one development target (for Android-like systems), something no other Android ODM could possibly achieve.

  • Report this Comment On October 27, 2013, at 5:04 PM, GaryDMN wrote:

    Fork Android? Why not use one of the existing, non-Android Linux forks. Android is a Linux derivative, just pick a different derivatives.

  • Report this Comment On October 27, 2013, at 5:24 PM, Zeus9999bc wrote:

    Samsung is a hardware company, and only leverage other companies software. if they part ways with Android, it will only be while testing the market with a new OS. As one of the users here mentioned it takes a lot of software engineers to maintain an OS and Samsung does not have them. they are trying to expand the software team in India, but at the end of the day they will not be able to complete, they build their empire on hardware this is what they know.

    Apple, Microsoft, Google, are software companies that got into the hardware business.

  • Report this Comment On October 28, 2013, at 1:55 AM, symbolset wrote:

    No. Samsung will hedge their bet in other ways.

  • Report this Comment On October 28, 2013, at 4:58 AM, yahyak123 wrote:

    Isnt this alternative OS Tizen?

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