Should Google be worried about Samung?
Samsung shipped 42% of the Android phones in 2012. HTC was No. 2 at 6%. Samsung is the big Gorilla of the Android kingdom. All others are simply chipmunks. Even while a lot of other OEMs have tried to take the Android flagship – but if there is one line of Androids that goes head to head (and has possibly dethroned) the iPhone, it is the Galaxy series of phones.
So is Google under threat from Samsung? The possibility cannot be ruled out-
• The threat centres on the possibility that Samsung is in a position to demand a greater share of Google’s mobile advertising revenues derived from search and other products.
• Samsung could also follow Amazon’s approach to the Kindle, which forked Android and cut off the core Google apps that generate revenue for the search company.
Google’s acquisition of Motorola Mobility, which makes smartphones and the Xoom tablet, was an “insurance policy” against such an event.Samsung, of course, is also moving to reduce its reliance on Android as Google develops its plans around the rumoured X Phone, with the scheduled release of Samsung handsets based on the Tizen OS later this year.
However, I am of the view that Google should be more worried about the cheap Chinese devices from the sweat shops of Shenzhen. Its not (just) about the consistently lower levels of engagement – a far cry from the Apple iOS. Thats a secondary worry. What should worry Google more is the faceless, nameless $45 commodity Androids. In the last count a third of Gartner’s smartphone numbers were from these small and fragmented device makers. These faceless, nameless Androids (Call them Black Androids) have no monetization value for Google Services – most of them come without a Google Play store.
Beyond the search and advertising revenues that Google makes from Android, there are those bits of signalling data- that the low cost Androids miss out – those valuable bits of information that map the user holistically. A data mine that can be leveraged for data with relevance to the user. The real structural benefit to Google from Android comes from the understanding it gives of actual users, and the threat comes from devices that do not provide this data – a significant portion of the $45 handsets skimp on Google apps just as they skimp on IMEI numbers. These devices are like dark matter: a lot of it around – but nothing really adding up to the worth. It is quite possible that iPhones generate more advertising revenue for Google than all Android phones combined. In that respect 20% iPhones sold globally are more valuable than 70% of the Androids sold.
On a slightly longer term, Android as an open platform may get leveraged across a lot of computing devices – Car consoles, TVs boxes and others without any genuine value addition to Google. Google must have to address this internal risk first!
Even when there is the threat of Amazon or Samsung forking the platform, there is also the threat that an increasing number of Android devices might have no more connection to Google than does an iPhone. That to me should be Google’s number 1 worry!