Google xPhone: An attack on Samsung, not iPhone

Given how many elements Google Android has clearly lifted from iPhone, I am not surprised that Google’s semi-secretive xPhone project has a name so similar to iPhone. But, in fact, the xPhone is more an attack on Google’s own partner, Samsung.

First, what is the xPhone?

Last week, both Reuters and the Wall Street Journal broke the story – almost certainly deliberately leaked by Google itself – that Google was overseeing a project within its Motorola division to create an “X-Phone”.

How is this different than the Nexus phone which Google oversees with a pre-selected partner?

Google XPhone

The fundamental difference is that with xPhone, Google has complete control over the development, distribution and marketing of this device. Consider that the most recent Nexus smartphone, built cooperatively by Google and LG, received rather middling reviews. Google, once the champion of “open”, clearly is no longer interested in working with a partner that can’t compete against the top smartphone makers in the world, Apple and Samsung. They want to build a smartphone that is at par with iPhone and the Samsung Galaxy. Perhaps they will do even better, leveraging the latest R&D from Motorola, particularly the company’s work with multi-core processors and mobile battery technology. This will certainly be a boon for users.

But make no mistake, first and foremost, the xPhone is an attack on Samsung, not Apple, not the iPhone.

To date, Android has been a massive cost sink for Google. They spent over $10 billion to acquire Motorola, which continues to bleed money. They have spent untold billions to market Android, develop products and services for Android, and to pay sales and other fees to giant carriers to distribute Android devices. From a business standpoint – and Google is first and foremost a business – Android has been a failure. Google continues to make far more money off iPhone and iPad than from Android or their high-end Nexus line. This cannot continue.

The only one making any real money off Android is Samsung. Samsung has become so important to Android, so dominant in fact, that I have even speculated that Samsung will buy the entire Android platform from Google.

Since I wrote that late last year, Samsung has become even more dominant within Android. Indeed, if not for Samsung, Google Android sales might collapse. As has been well documented, nearly *all* profits from selling Android handsets flow to Samsung. Samsung sold more than 200 million Android devices in 2012 – four times more than the nearest competitor. Samsung has confidently stated they intend to sell more than 300 million Android devices in 2013. There is an old saying: if you owe the bank a million dollars, you have a problem. If you owe the bank a billion dollars, the bank has a problem. In this case, the bank is Google.

Samsung has simply become too powerful within the Android ecosystem. What if Samsung were to ‘fork’ Android? What if they were to cut a global deal with Microsoft, say, and make Bing and Bing Maps the defaults? This is not far-fetched. Notice that in every Samsung advertisement, the focus is on “Samsung” and “Galaxy” and Galaxy-optimized services. No Google service or Android brand is ever stated.

Google makes more money, much more, from their services on iPhone than from their services on every single Android device. True, while Apple has made its Safari browser and Apple Maps the defaults, Apple has in no way prevented Google from placing every one of its mobile services on the iOS ecosystem. YouTube, Maps, Gmail, search, et al. Can Google be sure of the same from Samsung? No.

Samsung happily takes the free Android OS. They happily take the latest Google applications. But they offer nothing in return. They do not promote the Android brand, nor any Google services. They make billions off Android but deliver paltry revenues back to Google. They are responsible for approximately half of all new Android device sales, sucking out nearly all the Android device profits and thus limiting the appeal of the OS for other handset makers.

Plainly put, Samsung is a bigger threat to Google Android than Apple. The xPhone is a logical attempt to limit Samsung’s growing dominance. It’s no wonder Google is working on this semi-secret “xPhone” project. Their entire ecosystem is under threat. Only, not by Apple or Microsoft, not by Amazon or Facebook, but by their own partner.

Bottom-line: yes, the xPhone is Google’s attempt to full-on copy the Apple ecosystem, hardware plus software plus app store, all fully controlled by one company. This has proven extremely profitable for Apple. I think the xPhone is also an attempt by Google to squeeze any value it can from its extremely costly Motorola acquisition. But, I also believe that the xPhone is a long-term hedge against the rising power that Samsung has within Google’s own Android ecosystem. In the smartphone wars, friends and enemies can shift frequently. Google understands this.

Author: Brian S Hall

Brian S Hall writes about technology, immortality and food for ReadWrite, Techpinions, Unwired View and other publications. His thoughts on the 'smartphone wars' and how these are rapidly de-constructing markets, industries, business models and relationships around the world can be found on his personal site at www.brianshall.com.

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  • Tee

    Hmm, what did you expected, then? Google bought Motorola just because of that…

  • http://www.facebook.com/people/Rsdofny-Us/100001944301315 Rsdofny Us

    Love triangle further complicates the definition of “frienemy”.

  • Walt French

    Sammy would be foolish to fork Android—to ditch the Android brand with all its free advertising & Google software development — while they’re still building out their branded development teams and the app/ecosystem stores to support Tizen, Windows and yes, Android. Why buy the cow when Google gives you the milk for free?

    And I’m pretty sure that even though stores & media are the hot items to the blogosphere — and despite their being absolutely necessary for mass-market phones in the developed world — that at heart, Samsung likes the phone manufacturing business just fine. Driven out all the high-margin competition (save one) and is well poised to expand sales down-market, where it is still/also a major competitor.

    So Samsung has ALL its options open and is developing them for every manner of contingency. They’ll cut loose from Google and cut some sort of a deal with Microsoft at the time they’re confident that they won’t lose a single handset sale on the strategy that’s helped them become so dominant. Don’t hold your breath.

  • J0E1

    One could say Amazon was foolish for forking Android however they are still selling double the Kindle Fires than Nooks and Nexus 7′s combined while reaping huge rewards by locking it’s users into the Amazon ecosystem which isn’t possible with pure Android.

  • Walt French

    Amazon wasn’t selling millions of actual Android handsets under its own name. I’m talking about the notion that Samsung would voluntarily LEAVE the Google Open Handset Alliance.

    AOSP is a pretty nice deal. Eventually, I suspect, irrelevant, since the ability to build out a branded ecosystem and tools for search, etc., overlaps pretty much with the ability to manage the OS itself. (See all the skinning that goes on in Android.)

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    So true. Samsung has Tizen, has Bada. But I think the point is less whether Samsung should fork Android. Rather, with Samsung so powerful with Google’s own ecosystem, what does Google have to do? If only Samsung is making money off Android, and all the other handset makers can’t earn an acceptable profit, the ecosystem vision Google once has simply dies.

  • Naga Appani

    I always doubt Samsung.. They are such cheap brains, belong to unethical professionalism, copy cats…. It is good for Google to take the complete control of the Eco System yet keep it open.. I impatiently wait for this xPhone… I have always loved Motorola’s design + HW skills, and if it joins the World’s best Application Services, It will be superb… Google, Bring it on…

  • Michael

  • Tanya

    ‘Copycats’ that happen to be a vast conglomerate of a substantial magnitude. You do realise that they don’t just make phones? Whatever they got sued for is a pittance and are large enough to have three OS’s and support them all. just because they are successful at what they do doesn’t mean they imitate or copy, before they joined Android they were huge anyway, petronas towers ring a bell to you?

  • ElleOhElla

    Didn’t some Asian philosopher once said “Keep your friend close, but keep your enemy even closer?” I think that’s Samsung did.

    But about the xPhone, what’s the point when their Nexus line hasn’t make a dent? The “open” mentality is a double edge knife. Apparently, Google didn’t realize they cut themselves.

  • Naga Appani

    “before they joined Android they were huge anyway”–> Really?? Where, in Korea??

  • surethom

    Please put a xenon flash on the phone, this will steal the show on Samsung, HTC & even Nokia, so miss my old Sony Cybershot & nokia N82 phones. Xenon flash is the only way to get a fantastic night time photo of friends & family.

  • surethom

    Its Android that I like aswell as Samsung but If samsung left Android then I would just buy a HTC, Motorola or Sony.

    Now that Samsung is going to make its flagship phone 5″ or bigger I am already leaving Samsung, i much prefer 4.5″ to 4.7″, No one it top dog forever come back this time next year & motorola & HTC might have massive sales of there own to compete???

  • Tanya

    worldwide, read it up. Unless you’re not old enough to remember? Plus don’t underestimate the GDP of South Korea, they are an emerging Asian giant coming out of the shadows of an ailing Japanese economy.

  • russel etc

    I was thinking the same thing. Hypothetically, if Samsung does leave Android, then what? If Google cost them that much for Motorola, then it does make sense to make it Motorola as profitable as possible by competing as a independent entity with Samsung. It all boils down to delivering a better and more superior product or hardware given that the Android ecosystem has pretty much leveled the playing field for a lot of phone manufacturers. Case in point, assuming that Nokia announces that it will be joining the Android bandwagon, would that be enough to rock the entire smartphone world? Imagine brand loyalty and recognition coming from the Nokia fanboys from before.

  • Naga Appani

    Samsung was very dumb in Smartphone Market space before they joined AOSP.. It is Android all the way pioneered Samsung in a place what it is enjoying now.. Had Nokia chosen Android, Samsung would have been buried… These are Sales figures of Smartphones back in 2008/09.. Now, tell me, before Android, where were they??

    Nokia………..Finland……..68 million…..39% (41%)

    RIM…………..Canada…….37 million…..20% (16%)

    Apple…………USA………..25 million…..15% (7%)

    HTC…………..Taiwan……… 9 million……5% (5%)

    Samsung……South Korea…7 million……4% (2%)

    It is Android that all the way mattered to people, and Google Innovative Services rather a brick of HW Devices with Super AMOLEDs… There is no life to Samsung without Android I bet.. We will see who will stand down the line 18 months, and remember me.. Cya.

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    Perhaps. Again, my point here is that Samsung has become so dominant in Android that they are squeezing out others and limiting Google’s power. That’s why the “xPhone” is more at attack on Samsung than on iPhone.

  • Thomas Pierson

    Sounds to me you are an apple fanboy, how do you even think that apple is better, when just today the iphone 5 was rated the lowest in the latest survey, you must not have nothing to write about so you wanted to bash google and android, google didnt steal from apple, maybe you need to steal a article in order to give us something worthy, you should hang up writing for a living.

  • BrionBrown

    You are an idiot

  • Kevin Schotts

    a Completely misinformed idiot. ” Given how many elements Google Android has lifted from the iphone” hmmm android started in 2003, when did the iphonecome out? How much has iphone lifted from android, notifacations, panoramic view to mention just 2. the list does go on. Brian S hall is an iphone but munch fan boy and can not write an unbiased article. Not true journalism if you ask me. True journalists write only the facts, who, what, when, where, why, and how. Not put in their personal bias or opinions. He must of interned under Peter Mansbridge of the CBC.

  • Kevin Schotts

    nope your slanted biased article just shows that you should stick to one thing I phone. when it comes to android just shut up.Seriously just shut up.

  • Kevin Schotts

    Tanya, I loveyou…lol….Im snot a samsung fan boy, I like HTC and motorola, but that is my own preferences, but u have your facts straight. Sorry new blue keyboard on my nexus 7 no auto correction and I’m to much of an ADD riddled rodeo clown to fix my spelling and grammar errors at the moment, plus this last beer hit me kinda hard

  • http://www.amazon.com/-/e/B002VH8ECQ Brian S Hall

    If you know Android began in 2003, you know it was a Blackberry clone before it became a iPhone clone. Why pretend otherwise?