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Has Samsung's Tizen Become a Money Pit?

Samsung (NASDAQOTH: SSNLF  ) was set to launch its first phone running Tizen last week until it faced yet another set back. After a cancelled launch in Japan earlier this year, Samsung set its sights on Russia with the Samsung Z -- a high-end Tizen-based smartphone. The Samsung Z is now set to launch later this year.

Tizen, an alternative mobile OS, is Samsung's best opportunity to reduce its reliance on Google (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) . More importantly, it's a path for Samsung to differentiate its products from other Android phone makers.

But Samsung wants to make sure it's differentiated in the right way -- a positive way. Otherwise, the Samsung Z and its sequels may never get off the ground.

What kept the Z grounded this time?
In Japan, Samsung faced opposition from NTT DoCoMo, which shelved plans for the Tizen phone based on the competitive market. Last week, Samsung delayed the launch of the Z itself.

The Korean electronics maker said in a statement, "the smartphone will appear on the Russian market later, when we can offer our users a fullest portfolio of applications." In other words, the app store is holding it back from being competitive.

Samsung's pitch to developers is quite uninspiring: "The most obvious advantage [of developing for the Tizen phone] is that you'll be at the top in a half empty store on a decent premium device."

There are a couple problems with that pitch. First, if every developer heeded it, the store would no longer be half empty. Second, Samsung isn't selling anybody on the hardware.

At least one other high profile smartphone OEM is producing a phone with an Android fork, and it offers developers unique hardware to play with and take advantage of. Samsung is offering developers a "decent" device to develop on with the only advantage being that Samsung is going to market the device.

What problem does Tizen solve?
Tizen doesn't make things easier for anybody except Samsung.

Samsung has had its issues with Google in the past, but agreed to terms earlier this year to cross-license patents with the search giant. The terms stipulated that Samsung tone down its TouchWiz UI and feature Google's apps more prominently. Still, the terms are less than optimal for Samsung, which would rather feature its own differentiated design and apps.

But Tizen doesn't make things any easier for developers. If it did, Samsung wouldn't have had to entice developers with $4 million in contest money. Developers already have strong markets to make apps for with Android and iOS. There's nothing Tizen can add for them besides being "at the top in a half empty store." That's like having the number one toy at KB Toys in 2008 -- nobody's shopping there.

For users, Tizen doesn't seem to solve any problems. Aside from the obvious dearth of apps, Google's APIs -- most notably, Maps -- will be completely absent. While there are replacements, they're inferior products. Even if the hardware is great, many users will opt for the best user experience over the best hardware specs. Samsung cannot offer that with Tizen.

Not a complete waste
Although we're still waiting for a Tizen phone, Samsung has already released two smartwatch models running Tizen: the Gear 2 and Gear 2 Neo. Samsung was early to the market with its smartwatches, and has the advantage of its huge smartphone base to help sell the wrist computers. As a result, the Gear line has a strong market share.

Google has responded with Android Wear, a version of Android specifically designed for smartwatches. True to form, Samsung has elected to use Google's OS as well as Tizen and its own specialized Android OS for wearables in its spray and pray strategy for capturing market share. Still, Tizen is the OS in its flagship model.

If Samsung is able to maintain market share of the wearable market as competition increases and convert more users to its flagship smartwatch running Tizen, it may still have a shot at making the OS work. Until then, it will have a hard time attracting developers and consumers.

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Adam Levy

Adam has been writing for The Motley Fool since 2012 covering consumer goods and technology companies. He spends about as much time thinking about Facebook and Twitter's businesses as he does using their products. For some lighthearted stock commentary and occasional St. Louis Cardinal mania

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