Microsoft (MSFT 1.91%) believes Samsung (NASDAQOTH: SSNLF) is the only handset maker using Google's (GOOG 1.94%) mobile operating system -- or at least, the only one that matters.
Both in its recent advertising and in its slide deck laying out the rationale for acquiring Nokia's handset business, Microsoft has referred exclusively to Samsung's Galaxy phones, rather than address the broader Android ecosystem.
While I think Microsoft is misreading the situation, it lends further credence to the idea that Samsung's dominance could become problematic for Google.
Microsoft takes aim at Samsung
Since April, Microsoft has been running a series of advertisements mocking its smartphone rivals. Obviously, Microsoft has taken aim at Apple and its iPhone, but more interesting has been its criticism of Android.
There are numerous handset makers using Google's operating system -- HTC, Motorola, LG, and Sony, to name just a few. But rather than target these companies, Microsoft has focused exclusively on Samsung, characterizing the smartphone market as a simple war between Apple and South Korean giant.
Of course, pitting Samsung and Apple against one another may have simply been an interesting advertising angle, but it appears to be more than that. In a slide deck showing the reasons for buying Nokia's handset business, Microsoft referred to "Android/Galaxy phones," suggesting that it views Google's operating system as the exclusive domain of Samsung.
There's more to Android than just Samsung
Admittedly, it is -- sort of. Together, Apple and Samsung account for almost all the profit in the smartphone industry. Other Android handset makers, such as Sony, are earning just a modicum of profit; or, like HTC, they're losing money.
And while Samsung isn't the sole maker of Android handsets, it does far outsell its rivals: A recent study conducted by analytics firm Flurry found that, of smartphones running Google's operating system, almost 60% were made by Samsung.
Nevertheless, I think Microsoft's take on Android is flawed. Samsung may continue to dominate for the time being, but there's no guarantee that will always be the case. The Moto X, the flagship of Google's own Motorola division, is a unique phone aimed at the masses. Even if it never sells as well as Samsung's flagships, it suggests that, for the first time in years, Motorola could be on the verge of regaining its position as a top Android OEM.
Sony, too, seems to have reimagined its mobile devices. Its new lineup of Xperia Z handsets and tablets has been widely praised, though they were slow to make it to the U.S. Sony's management has said it will continue to emphasize its devices running Google's operating system, although it will focus on Japan and Europe for the time being.
Then there's China. Google's Android dominates the Middle Kingdom, with the Chinese government going so far as to label Android's market share a cause for concern. Unfortunately for Google, it benefits little from China -- heavily modified ("forked") versions of Android are common -- but along with that market share has come a wave of new companies using Android. Some of these companies, like Lenovo and Xiaomi, have begun eyeing international expansion.
But what if Microsoft is right?
But there's no guarantee that these companies will succeed. In a recent interview with The Guardian, Nokia's soon-to-be-former CEO Stephen Elop explained why his company chose Windows Phone over Android. Back in 2010, when Samsung was only getting started with its Galaxy handsets, Elop foresaw the company's dominance -- and he didn't want to compete.
Samsung doesn't just make its Galaxy handsets -- it also makes almost all the components that go into them. This unprecedented vertical integration gives the company a leg-up over the competition and allows it to spend billions on advertising. It has worked: Growing evidence suggests that average consumers are more familiar with Samsung's Galaxy brand than they are Google's Android.
From Google's perspective, Samsung's dominance could get problematic. If the company ever decides to fork Android, or as sources told The Wall Street Journal earlier this year, demand a better deal from Google, it could undermine Google's mobile strategy.
Galaxy phones? Or Android phones?
Microsoft seems to think the smartphone wars are a two-horse race: Apple against Samsung. That's not entirely true -- there are plenty of other Android OEMs -- but given Samsung's dominance of Google's operating system, not a totally unfair characterization.
With Motorola, Sony, and Chinese handset makers entering the market, the Android ecosystem could soon become far more complex. Still, as long as Samsung reigns supreme, Microsoft can continue to think of Android as being synonymous with Galaxy -- and Google has reason to be concerned.
