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Somewhere Tim Cook and Stephen Elop are laughing

The Wall Street Journal is reporting that Google Inc. (GOOG) is holding an emergency summit at the 2013 Mobile World Congress (MWC) in Barcelona.  At the mobile industry's top trade show, Google is reportedly meeting with Android phonemakers like HTC Corp. (TPE:2498) and Hewlett-Packard Comp. (HPQ) about fighting back to prevent Samsung Electronics Comp., Ltd. (KSC:005930) from gaining too strong a dominant position in the Android market.

I. One Company to Rule Them All?

Samsung currently accounts for 40 percent of Android sales -- more than any other company.  It's also easily the most profitable of any Android device-maker.

Some analysts think Google is fearful that Samsung will leverage its powerful position to try to get a bigger cut of Google's slowly growing mobile ad revenue stream.  Sources claim that Samsung currently gets around 10 percent of the revenue from clicks on its devices.  A bump to Samsung's take-home percentage could help offset per-device payments it has to make to Microsoft Corp. (MSFT) for intellectual property licensing.

Google hopes to make $8B USD in 2013 via mobile advertising on Apple, Inc.'s (AAPL) iPhone and Android.

Andy Rubin
Andy Rubin reportedly warned Android phonemakers not to let Samsung get too powerful.
[Image Source: The Next Web]

At a closed-door event, the WSJ reports that their source was in attendance and heard a presentation by Android Chief Andy Rubin.  Mr. Rubin allegedly praised Samsung's success, but warned that it could be a "threat" if it furthered its dominant position.  Google is reportedly eyeing offerings like HP's $169.99 USD upcoming Android slates.

Samsung in 2012 was the biggest smartphone shipper, shipping 215.8m smartphones, almost all of which ran Android.  By contrast, Apple "only" shipped 136.8m iPhones.  Samsung hopes to ship 390m smartphones in 2013.

In 2011, Samsung only accounted for 15.6 percent of Android tablets, but in 2012 it advanced to 27.9%, becoming a major player according to Interactive Data Corp. (IDC).  Samsung passed Amazon.com, Inc. (AMZN) in Q4 2012 to become the largest Android tablet seller (Amazon uses a modified Android build in its "Fire" tablets).  Samsung just revealed the Galaxy Note 8.0, a hot tablet that is vying with Apple's iPad Mini.

II. Samsung Could Seek Alternatives

If Samsung reacts badly to Google's efforts to keep it in check; it could jump ship to one of a couple rising platforms.  It already has made Windows Phone devices and has a good relationship with Microsoft Corp. (MSFT).  Alternatively, it could opt to test the waters with a Mozilla OS device (Samsung's South Korean counterpart LG Electronics, Inc. (KSC:066570) is doing precisely that).  And then there's Tizen, a mobile Linux kernel that Samsung is co-developing with Intel Corp. (INTC).

For now, Google and Samsung are united by their common enemy: Apple.  Samsung will launch its counterstrike against the iPhone 5 on March 14 -- the Galaxy S IV.

Samsung Galaxy S IV
In March Google and Samsung will collaborate on the massive Galaxy S IV launch.
[Image Source: AndroidSpin]

A leaked spec sheet has been circulating which claims the hot handset will pack:

• 4.8-5.0-inch 1080p display
• Android 4.2 Jelly Bean
• 1.9GHz Qualcom Snapdragon 600 processor
• 2GB RAM
• 16/32/64GB storage options
• Removable SD card slot (up to 64GB)
• 13MP rear-facing camera, w/ "Orb" technology for compressed panorama shots
• 4G LTE support
• Multi-purpose / Dedicated camera button
• Bluetooth 5.0
• 3100 mAh battery

Will the Galaxy S IV be the last major effort between Google and Samsung?  It's possible, but at this point it's likely the pair's ties that bind are stronger than those that separate.

Source: WSJ



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RE: Android is winning (C) Tony
By Tony Swash on 2/27/2013 9:14:59 AM , Rating: 1
I did and I sure wish I hadn't ;)

I guess the lesson is that the two things one should never do is bank on Wall Street making rational decisions and buy a handbag for a woman without getting very, very precise instructions.

The way the whole Google - Samsung relationship pans out is going to to be very interesting. I am assuming that Samsung will retain, and possibly enhance, it's predominant position in the Android handset market for the immediate future. If that is the case then both Google and Android have a kill switch on each other's mobile strategy although Samsung's is the more lethal. If Samsung either forks Android or migrates to another OS taking it's customer base with it, or a mixture of the two, then Google's Android strategy is dead in the water. All of Google's work building Android will, in those circumstances, will have resulted in them being reduced to almost compete reliance on iOS for mobile revenue, a position Android was meant to avoid. Google can use it's Motorola division to build alternatives to Samsung's offerings but that endangers it's relationships with all Android OEMs or it could shut Samsung out of future Android iterations. Both are risky propositions. I think Samsung has the stronger hand here

Samsung's strategy may well be a repeat of the play book they have used so many times before, in particular in relation to Apple, which is to become the major player in the supply chain, watch what is coming down the pipeline via advanced orders and thus gauge the size of potential future markets, invest in production facilities using customer revenues, and then enter the market with their own products sold in competitor with their own component customers. Everybody seems to be copying Apple's vertical integration strategy (Surface, Nexus, Kindle, etc) and Samsung seems to be moving down that path rapidly and the next big step would be to control it's own OS and to control (and earn income from) it's own service stack.

A more general point about the handset market is how the supposed commodification of the hardware layer and the move of value to the software layer has not happened. The only two companies making money in an exploding and hugely lucrative mobile device market are both vertically integrated hardware device makers. This is an interesting article:

http://www.asymco.com/2013/02/22/bits-v-bytes-foll...

And these two graphs from that article tell the whole story more or less.

http://www.asymco.com/wp-content/uploads/2013/02/S...

http://www.asymco.com/wp-content/uploads/2013/02/S...


RE: Android is winning (C) Tony
By Pirks on 2/27/2013 3:30:44 PM , Rating: 1
Thanks for being honest Tony :) I disagree on Wall Street being irrational though, looks like Apple stock indeed did not deserve to hit $1000, not because Wall Street is crazy but because Google and Samsung put up an excellent fight against iPhone and started to mount a serious pressure on iPhone in 2012, and Wall Street just reflected this phenomenon in the Apple's stock price.

Besides, the whole market for smartphones and tablets became much more crowded with Google, Samsung, Motorola, BlackBerry, Microsoft, Sony, HTC and LG offering quite polished products. They all learned from Apple's tight integration, strong retail presence and overall product polish and started to catch up. So Wall Street eventually realized that the huge gap between Apple and the rest of the pack just got narrower.

I can tell you that I tested quite a few smartphones myself, including playing with a BB Z10 recently - the gap between older generation of Android 2.3, WinPhone 7.0, BB7 and their modern versions - Android 4.1, WinPhone 8.0 and BB10 is a huge generational shift, for ALL of them. It's like Apple gave a huge jolt to all the sleepy OEMs in the world and everyone suddenly realized Apple is an existential threat, so all of them, including BB and MS and other similar slowpokes/former monopolists - all of them started to move real quickly now, MS suddenly realized that stuffing old Win95 shit into phones won't cut it, BB dropped their MS-DOS-in-the-phone called BB7 and reinvented themselves with QNX which is real slick and a joy to use now, especially for productivity/office people, businessmen who multitask and jiggle many things in their phone, BB10 is solidly pwning everyone including WP8 and iOS in those areas.

Wall Street is not dumb and they have noticed all this and... they noticed that while other sleepy OEMs underwent huge generational leaps (Android 2.3 to Android 4.1 is also a kind of generational leap) Apple did NOT do anything like that. There is nothing to improve in Apple products, they can only iterate and hone them but that's it. iPhone 5 is not a revolution or even a substantial improvement. You take 4S and 5 in your hand and... they are all the same. The difference between WP7.0 and WP8.0 is huge, the difference between BB7 and BB10 is even more than huge, this is a reinvention of everything from scratch, no less. But new iPhone? Nope, that's the same stuff but with a bit more pixels and shaders inside.

So don't blame Wall Street Tony, they just reflect the real world facts. You failed with a prediction of $1000 stock, and you failed with a prediction of total iPhone 5 domination, and later you will understand all this. Probably Steve Jobs's death played a role here, without him who's going to give us another jolt of revolution? Cook is a good CEO but he's a "hone the product" kind of CEO, not the "invent new market where no one ever dared to go" kind of CEO.

When you will understand this, Tony, you will stop making stupid predictions about $1000 stock and all. Good luck with that ;)


RE: Android is winning (C) Tony
By retrospooty on 2/27/2013 9:47:57 PM , Rating: 2
It's pretty rare that I agree with you Pirks, but on this I certainly do. Everyone and their mother, and the entire stock market and the entire industry can see that Apple is stagnating. Pretty much everyone but Tony and other die hard fans see that. He keeps saying "oh well they just had a profitable quarter so all is well". Ask RIM in 2010 how profitable quarters work for them. They need to start moving now, before they get lapped.


RE: Android is winning (C) Tony
By Lord 666 on 2/28/2013 4:42:59 AM , Rating: 2
Apple's innovation died on 10/5/2011. Unless they have discovered the secret to bringing back the dead or communicating with them beyond the grave, the run is up.


RE: Android is winning (C) Tony
By retrospooty on 2/28/2013 7:30:16 AM , Rating: 2
I obviously get what you are saying, but even when he was alive, Apple hadnt released anything innovative since the original iPhone in 2007. Since then its been tiny improvements each round while the rest of the industry caught up and then surpassed them.


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