Samsung (NASDAQOTH:SSNLF) has been working feverishly on a differentiated software ecosystem in a similar vein to what Apple (NASDAQ:AAPL) enjoys with its rich iOS. The vast majority of Samsung's smartphones get to leverage the open-source and very flexible Google (NASDAQ:GOOGL) Android operating system (and Samsung makes a killing off of these devices), but the ecosystem owner is still ultimately Google.
Samsung, with Tizen, is trying to break free of Google's ecosystem. The question, however, is just how likely this is to succeed?
Is Samsung simply getting too greedy?
The bottom line is that Samsung makes a mint from selling handsets. Thanks to its very favorable cost structure, even on the lowest end handsets. You see, the company supplies many of the most expensive components.
Then you factor in the higher-end devices and Samsung is far and away the leading Android smartphone vendor. Of course, given this leadership position built on billions in marketing and massive scale, it would make sense to try to secure that moat with a software ecosystem -- or would it?
The problem with this move is that Android is popular precisely because it's so broadly supported on a wide range of devices from a slew of vendors. It's a common platform that's open source, so it can be customized to the hardware vendor's content.
For example, Samsung devices with its TouchWiz interface look almost nothing like what one would see from a device running stock Android. However, despite the UI customization, Samsung customers have access to a wide variety of Android applications today -- a big selling point. So, does Samsung really want to throw away all of this just to have its own ecosystem from which the royalties from software sales would be trivial compared to its hardware margin?
Samsung won't leave Android until it can, however
Samsung didn't get to be Samsung by making stupid decisions -- it's not going to try to "dump" Android until it would be safe to do so. It would be a complete surprise to this Fool if Samsung simply tried to leverage its strong brand to force its customers to use Tizen, at least in major markets.
The tough part, though, is just how eager consumers would be to buy a Tizen-powered phone from Samsung when they could get Android-powered ones. Samsung could conceivably try to price its Tizen phones lower than their Android counterparts in a bid to spur adoption, and if it were to do so, the results of such an attempt would be very interesting indeed.
Samsung's partnership with Intel seems strange
One part of this Tizen business that doesn't seem to make one bit of sense is the partnership with Intel (NASDAQ:INTC). While Intel does bring plenty of low-level software expertise, as well as some solid silicon to the table, it is unlikely that Samsung would want to use Intel silicon in its Tizen-based phones, unless of course, Intel's chips really delivered a knockout blow compared to Samsung's in-house chip.
Is Intel supporting Samsung with Tizen simply to make sure the software support is there for X86 in case other smartphone vendors wanted in on Tizen? Or could Intel be contemplating selling its own Tizen based phones? At any rate, given that Samsung is one of Intel's toughest competitors and barriers to the smartphone space, this partnership really does seem odd -- especially since Intel is now getting quite friendly with Google.
Foolish bottom line
At the end of the day, Samsung is the type of company that tries everything until it finds something that works. Right now, even as it continues to succeed brilliantly with Android devices, it is also looking to move to an OS over, which it has more control. Only time will tell whether this push succeeds and, quite frankly, it's not clear that ditching Google is important enough to warrant all this effort. Still, Samsung doesn't have much to lose either way.
The real puzzle is just what Intel's plans are with Tizen and whether these plans involve providing silicon to a Samsung-built Tizen device. Time will tell, but with Samsung laying out its aggressive plans to push its semiconductor manufacturing and its in-house chip design, it's tough to see Samsung really eager to use Intel chips in Tizen devices.
Ashraf Eassa owns shares of Intel. The Motley Fool recommends Apple, Google, and Intel. The Motley Fool owns shares of Apple, Google, and Intel. 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.