In the smartphone industry, there's probably no more lucrative partnership than Samsung (NASDAQOTH:SSNLF) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL). By partnering Samsung's device excellence with Google's Android operating system, both companies have catapulted to the top of their respective divisions. Samsung is currently the No. 1 smartphone manufacturer, and Google's Android is by far the most popular operating system.
So naturally, you'd think both companies would be content in this symbiotic relationship; but the relationship could best be defined as, "it's complicated." Although publicly, pleasantries are extended, both companies fear entrusting a part of their empires to another entity.
A Wall Street Journal report outlined Google's fear of Samsung's dominance in 2013, even going as far as crediting this fear as the reason for Google's purchase of Motorola Mobility in order to prevent Samsung from demanding more in negotiations, or to prevent the company from forking, or modifying, Google's Android OS.
These fears have been somewhat ungrounded, mostly because Google's contract forbids forking if you want to produce any model with full Google API functionality with Google Maps, push notifications, and other functions any user expects from a smartphone. But the contract doesn't forbid Samsung from working with other operating systems, including Tizen, Samsung and Intel's Linux-based operating system. And if Samsung's newest phone is any indication, the company is serious about its new operating system.
Meet the Z1... well, if you're in India
This week, Samsung announced its intentions to release its first Tizen-operated smartphone, the Samsung Z1, in India for a reported 5,700 rupees -- or less than $100. Courtesy of Techcrunch, the device boasts 4GB of storage (up to 64GB micro SD card expansion), and the phone runs Tizen version 2.3 powered by a 1.2 GHz processor and 786 RAM.
The phone finds competition from fellow-Android device maker Xiaomi that recently boasted sales of 1 million smartphones in India late last year, and is looking to move outside of its home market of China in a major way. For those who are not following Asian markets closely, India is a smartphone battleground market at the low/mid-range due to its huge population of more than 1 million people.
But better yet, India currently has a low smartphone-penetration rate and high rate of smartphone subscriber base growth. These factors point to a large runway for growth for smartphone makers able to claim a stake in this market. If Samsung's Tizen is able to develop substantive market share in India, it's entirely possible for the company to find developers to design apps and, ultimately, decrease its reliance on Google's Android... at least at the low-end/mid-range.
Lots of competitors, including itself
Unfortunately for Samsung, Tizen's India success should be filed in the easier-said-than-done folder. The company finds itself facing a host of competitors -- the aforementioned Xiaomi, high-end manufacturer Apple that's sold nearly 500,000 units in the final quarter of 2014, and even Samsung itself with its Android-OS units. Asking a market with increasing choice to pick an unproven operating system may be a tough task indeed.
Earlier this year, Samsung was going to release Tizen in Russia as its inaugural market, but eventually decided otherwise. For a multitude of reasons, mostly macroeconomic, that would have probably been a horrible launch market for this new operating system.
In the end, launching in India is a smart move; but Samsung is not looking to drop Android in any meaningful way for a long time, if ever. Google and Samsung will need to remain frenemies for the time being.
Jamal Carnette owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Intel. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), 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.
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