Forget the smartphone war between Apple iPhone and Google Android. It is in their mutual interests to achieve a semi-permanent détente, and to own this rapidly growing global market. Apple’s iPhone dominates on the hardware side, sucking up the bulk of all handset profits, while Google dominates the mobile web landscape, capturing valuable data across a billion users. A smartphone ‘cold war’ could prove highly profitable for both Apple and Google for the long-term. Think, Coke vs Pepsi, or the more obvious, US vs USSR. They were enemies, yes, but they could only assume that to destroy the other would be to destroy themselves. Each, however, could dominate their respective spheres. Only Samsung stands in their way.
Apple and Google already directly benefit from each other. iPhone users provide both more and more valuable data to Google than do Android users. In this way, Apple benefits Google. By having Google’s apps, including search, voice search and maps, which are considered better than Apple’s defaults, available to its users, Apple knows that its platform will remain the world’s most favored. Google benefits Apple.
The threat to Apple and Google – in the smartphone wars – is not from Windows Phone or Blackberry, nor from Symbian or Jolla or Ubuntu or Firefox. It is from Samsung. It is in the interest of both Apple and Google to work together, at least tacitly, to minimize Samsung’s threat.
The Rise of Samsung
One of the more interesting aspects of Samsung’s rapid rise to smartphone prominence is that they are cheered on by staunch Android fans, those who have sworn a vow of abstinence towards Apple. Why? Apple is accused of being a mere “marketing company”. Yet Samsung spends an estimated 10X more to market their devices. The oft-repeated claim is that Apple doesn’t innovate – they just take what’s already in development and put a shiny coat over it. But who is more guilty of this than Samsung? They take Google’s operating system and apps and place them inside devices that look suspiciously close to an iPhone, resulting in tremendous sales, of course, but also a series of costly lawsuits around the world.
In cheering on Samsung in their epic battle royale with Apple, I think the Android faithful have it all backwards. Samsung will not destroy iPhone. Samsung could, however, destroy Android.
True, Samsung almost certainly takes revenues and profits away from Apple’s iPhone business. More importantly, though, Samsung sucks up nearly all the profits of the Android handset market. This limits product roll-out, marketing and ongoing innovation from other ecosystem members. No profits, no business. Samsung is a threat to iPhone, no doubt, but in this case, it’s more a threat to Google and its vision for Android.
In the days when Microsoft ruled the personal computing landscape, there was a healthy ecosystem of partners that made a great deal of money. Intel, obviously, but also HP, Dell, and a litany of other hardware and software companies. Years into Android, however, and profits flow almost exclusively to one company – Samsung. Could Windows have survived if the only company that made any real money was, say, Compaq? Not even Microsoft itself? Such is the situation that now exists with Android, and it is not a healthy one. Why should HTC or LG, for example, not direct more and more of their efforts toward Windows Phone, or some other Android alternate? How many years will hardware companies continue to make Android devices while earning close to zero profit? This is an untenable situation. Apple is not preventing HTC or Sony or LG from succeeding with Android, it is Samsung.
The purpose of Android is to ensure Google can embed its numerous data-collecting services on as many devices as possible. Google captures more and better data on everyone, which they then sell to third parties. In this way, Android is an extension of Google’s business model from PC to smartphone. Despite years of development, however, and billions of dollars spent to grow the ecosystem, most of Google’s mobile revenues comes from Apple iOS devices – iPhone and iPad. Despite cries that Apple is “closed” and iPhone a “walled garden”, Apple has done nothing to stop or otherwise limit Google from placing its services on iPhone. And why should they? Apple’s revenues come from hardware sales. Google enhances Apple’s iPhone appeal. Despite the fact that many choose sides, the truth is that Apple and Google can easily co-exist.
I am not convinced that Google can so easily co-exist with Samsung, given the current one-sided relationship. Samsung used Android to become the world’s leading seller of smartphones. They offer little in return to Google. Samsung happily sells ‘Android’ devices in China – all without Google. Samsung continues to work on Tizen, a competing mobile OS that is also supported by Intel and several large carriers. Samsung is working on its own program to ensure its devices meet standard enterprise security requirements – not Android devices, but Samsung Android devices. Samsung hopes to offer their own digital media platform, a direct competitor to iTunes, yes, but more directly to Google Play.
Samsung does nothing to promote Android or Google. It is nearly impossible to find any commercial or marketing announcement of a Samsung smartphone that mentions either Android itself, or shows off any Google service. Samsung promotes its brand first, then the Galaxy line-up, never Android. Indeed, their television ads typically focus only on Samsung-specific applications.
Apple has shown that it can compete against – and withstand assaults from – Samsung, specifically, and Android, generally. However, all other Android competitors have not yet shown that they can fight Samsung. If Google wants to preserve the Android ecosystem, they cannot allow this situation to continue. An Apple – Google smartphone détente will benefit both companies. Samsung is a threat to each, but more so to Google and Android.
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