February 27, 2013
Trouble’s Brewing In The Samsung/Google House
Michael Harper for redOrbit.com — Your Universe Online
The state of mobile computing (smartphones and tablets) looks much different today than it did even 3 years ago. Though Apple and Google have long been competitors in the Great Platform Wars, Samsung has quickly become something of a nuisance for both companies. Apple and Samsung have a storied legal past and continue to track mud throughout the world´s courts. Now, a new Wall Street Journal report claims Google has become cautious of Samsung and their growing popularity.
The Galaxy maker has been an important partner for Google, helping drive Android to the top of the global charts. According to a slew of fourth quarter reports released at the beginning of the year, nearly 70 percent of all smartphones in the world ran some version of Android, a charge led mostly by the Galaxy S III.
It is always important to remember while Google may have their fingers in several proverbial pies, they are, first and foremost, an advertising company. Android, Chrome, Chromebooks, and even the upcoming Glass are all products used to gather information about consumer habits, which will later be sold as ads. As Samsung is far and away Android´s largest partner, they´re responsible for driving plenty of search traffic Google´s way, as well as feeding them with other data Google craves. Sources have told the Journal that Google executives are worried Samsung could flex its muscle and begin asking for a larger share of Google´s primary business: Ads. The Journal claims Google execs are taking advantage of Mobile World Congress (held in Spain this week) to encourage other smartphone manufactures, such as HTC and HP, to improve their offerings and begin taking on Samsung. If these companies aren´t able to eat into Samsung´s market share, Google may be forced to leverage their newly acquired hardware division, Motorola Mobility, to make their own devices and protect their ad revenues.
In the past, Samsung has received as much as 10 percent of these mobile ad sales. According to the Journal report, Samsung has “signaled” they “might” want to begin earning a greater percentage. After all, all those Galaxy phones are bringing more people to Google´s services, such as Mail, Maps and YouTube. And more users means more ad sales for the search giant.
“There is a threat from Samsung to Google that is real," said Rajeev Chand, a managing director at investment bank Rutberg & Co., who spoke with the Journal.
"Over time, Samsung will be able to leverage its market-share dominance to negotiate better terms from Google."
The most recent analysis from IDC claims Samsung shipped some 215 million smartphones last year. Nearly all of these phones ran Android, capturing 39.6 percent of the global market. Apple, who only makes one phone and does not license their software, came in second place to Samsung, selling 136.8 million iPhones for 25.1 percent of the global market. The recent Canalys report claims Samsung grew by 78 percent last quarter, and if their soon-to-be-released Galaxy S IV sells as well as its predecessor, the company won´t be slowing down anytime soon.
Samsung has also shown off some of their independent swagger this week by announcing a partnership with Visa to bring NFC-driven mobile payments to their upcoming smartphones. While not a direct move against Google, the search giant does have their own payments system (Google Wallet), which has yet to really take off in the states.