2 Enormous Tech Giants Will Challenge Apple and Google Later This Year

Amazon and Samsung will take on Apple and Google later this year.

Apr 21, 2014 at 1:05PM

Apple's (NASDAQ:AAPL) iOS and Google's (NASDAQ:GOOG) Android firmly control the U.S. smartphone market. According to Consumer Intelligence Research Partners, the two operating systems collectively powered roughly 95% of the phones sold in the U.S. last quarter.

Despite their overwhelming dominance, it appears that two new challengers are preparing to enter the market this year: Amazon (NASDAQ:AMZN) with FireOS, and Samsung (NASDAQOTH:SSNLF) with Tizen. Although the odds are stacked against them, investors shouldn't discount their potential.

Amazon's smartphone appears
Last week, images of Amazon's long-anticipated smartphone finally leaked onto the Internet. With a 4.7-inch screen and six cameras, Amazon's handset should compete with Apple's iPhone and many of the flagship handsets running Google's Android, and for a number of reasons it could be successful.

First and foremost, Amazon's smartphone should ship with plenty of apps. Alternative operating systems -- BB10 and Windows Phone -- have been severely hamstrung by their lack of apps, but purchasers of Amazon's smartphone won't have the same problem. As FireOS is simply a modified version of Google's Android, most of the major Android apps are available for Amazon's operating system.

Those app creators have ported their apps to Amazon's store primarily because of the runaway success of its tablet business. Although Amazon doesn't offer up exact sales numbers, it was the third largest seller of tablets in the fourth quarter of last year, according to IDC. Amazon's established tablet business could carry over into the smartphone space, as satisfied Kindle Fire owners purchase Amazon's smartphone -- apps and movies purchased for their Kindle Fire tablets would easily carry over to their Amazon smartphones.

Samsung says it will finally launch a Tizen phone
While Amazon's management has remained mum on it smartphone aspirations, Samsung has been explicit in its plans to move forward with Tizen. Earlier this month, Samsung launched the Gear 2 and Gear 2 Neo smartwatches, both of which run Tizen, and Samsung has promised to ship a smartphone powered by the operating system this year.

Samsung has been working to generate interest in the operating system in recent months, including a contest designed to entice mobile developers to code for the platform. As the largest smartphone manufacturer in the world, with a dominant supply chain, large advertising budget, and relationships with carriers around the globe, Samsung is well positioned to introduce a new operating system.

Reasons to doubt Samsung and Amazon
Yet even with their many advantages, the odds are still stacked against both upstart operating systems.

Samsung's Galaxy phones are massively popular due, in large part, to the fact that they run Google's operating system. Although Samsung may dominate when it comes to hardware, its software skills are far less established -- reviewers are often critical of the software modifications Samsung makes to Google's operating system. Perhaps more importantly, Samsung's Tizen phones won't have the robust app ecosystem its Android-powered Galaxies offer. Samsung has been successful in getting some major tech firms to support its Tizen watches (including PayPal), but Tizen lacks the deep bench of apps Google's Android and Apple's iOS offer.

Amazon, too, could have an app problem. While the most popular Android apps are available for its Kindle Fire tablets, not all of them are. Some, like Google Maps, aren't, and likely never will be, given that FireOS, by design, excludes Google's services. Amazon's Kindle Fire tablets may have been able to thrive without Google Maps, but a navigation app is practically a necessity for a smartphone.

Moreover, one of Amazon's biggest advantages could be useless when it comes to the smartphone market. In the past, Amazon has pitched its Kindle Fire tablets as a cheaper, yet just as capable, alternative to Apple's iPad. The problem is that, unlike tablets, most smartphones (at least in the U.S.) are still bought on two-year contracts with generous carrier subsidies. Even if Amazon undercuts Apple's iPhone significantly, consumers on subsidized contracts are unlikely to care.

Threatening the duopoly
That said, Amazon and Samsung's new smartphone operating systems are definitely a threat to Google and Apple's dominance. Google, in particular, could be on the hook, as longtime Android users may be more likely to choose a somewhat familiar operating system (FireOS) or familiar hardware manufacturer (Samsung). But Apple could still be pressured by rising competition.

Apple's next revolutionary product
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Apple, and Google-Class C Shares. The Motley Fool owns shares of Amazon.com, Apple, and Google-Class C Shares. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information