Is Samsung's Decline a Bad Sign for Google's Android?

Samsung's mobile dominance appears to be slipping. As Google's largest hardware partner, Samsung's weakness could put pressure on Google's version of Android.

Aug 14, 2014 at 7:55AM

Samsung (NASDAQOTH:SSNLF) is struggling. Last month, when the Korean tech giant reported earnings, it revealed that its revenue and profits have declined sharply. Meanwhile, its smartphone market share has begun to slip.

As Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) single largest hardware partner, and the one handset manufacturer most responsible for Android's global domination, Samsung's decline could be a problem for Google's mobile ambitions.

Samsung dominates Android
Samsung's share of the Android market is massive. In February, analytics firm Localytics estimated that Samsung had manufactured nearly two-thirds of the Android devices currently in use -- LG came in a distant second, with just 7% of the market.

Samsung's flagship Galaxy smartphones comprised the bulk of those devices, but Samsung has also emerged as the dominant player in the Android tablet market. With a plethora of tablets offered in nearly every size and at every price point, Samsung has been steadily growing its share of the tablet market, with shipments rising to 11.2 million in the first quarter, up from just 8.5 million in the first quarter of 2013.

Samsung's Galaxy brand has become so synonymous with Android that Microsoft, in a presentation outlining its rationale for acquiring Nokia's handset unit, referred to all Android handsets as "Android/Galaxy" phones.

Google has many other hardware partners
Samsung is the largest and most dominant Android OEM, but it isn't the only one -- Google has many other hardware partners, some of which produce high-end Android devices as good or better than Samsung's. In addition to the aforementioned LG, there's Sony with the Xperia line, HTC with its well-regarded One, Motorola and Asus, in addition to emerging Chinese upstarts like OnePlus and low-end players like Karbonn and Micromax.

Although Samsung is struggling, Google's other hardware partners are seeing some limited success. Last month, LG reported a sharp rise in profit for the second quarter, boosted by growing smartphone sales. HTC's results were similar, with net profit and revenue rising. Motorola, meanwhile, appears to be on the upswing, with its low-cost Moto G capturing a sizable share of Indian smartphone market: According to Flipkart, one of India's largest e-commerce websites, Motorola has become a top five smartphone vendor in the country.

Android forks are pressuring Samsung
But given Samsung's size, the Galaxy brand would be difficult to replace, and Samsung's decline does pose a real risk for Google. Much of Samsung's struggle appears to be emanating from the low-end, in markets like China, where heavily modified versions -- called forks -- of Android are common. Some analysts were quick to see Samsung's recent problems as a positive sign for Apple, but when Samsung reported earnings, it blamed emerging market competition rather than pressure from high-end competitors.

One company that appears to be giving Samsung fits is Xiaomi, a relatively new Chinese upstart that has, within the last four years, risen to the top of China's smartphone market. Unlike Samsung, and most of Google's other hardware partners, Xiaomi relies on a forked version of the Android operating system -- called MIUI -- that strips out Google's services in favor of its own. Thus far, Xiaomi has been contained to China, but has begun to branch out into new markets, including India.

Xiaomi's recent growth appears to be a major factor behind the increasing popularity of Android forks: According to a recent report from ABI Research, forked versions of Android composed roughly 20% of the smartphones shipped in the second quarter, up 3% sequentially.

Does Google need Samsung?
In that sense, Samsung's recent weakness is a poor sign for Google's mobile ecosystem -- despite widespread speculation that it would eventually introduce a fork of its own, Samsung has remained loyal to Google's mobile operating system.

To be clear, Google's version of Android is still overwhelmingly dominant -- it shipped on nearly two-thirds of the world's smartphones last quarter. Samsung's decline won't doom Google's mobile ecosystem by any means, but the weakness of what Google calls its "fellow traveler" certainly won't help.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares), Google (C shares), and Microsoft. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers