First, they just make Google wealthier and continue to deliver customers to Google instead of to themselves. Yes, Android has served them well so far, but as long as Google owns the OS, Samsung is beholden to Google and is just a slave to them. Second, they drive revenue to Google, revenue that could be all theirs if they owned the customers. Third, they will continue to face margin pressure as hardware based profits shrink. As I mentioned above, our analysis suggests Samsung’s margins, even on their upper end products, could be reduced to around 10%-15% as even high end smartphones become more commoditized.
All of this is true. But if they go all in on Tizen, they’re going to see massive churn unless there’s some way they can still leverage Android’s app store or make it super simple for developers to repurpose those apps for Tizen.
They’re stuck. And they’re stuck in a major way. Nor is it particularly surprising since Samsung, as a company, have never been vertically focused, whether it be with phones, laptops or really any other technology they’ve had a hand in building.
Samsung on Monday said it’s now offering owners of the original Galaxy Gear the choice to switch over the smartwatch’s operating system to the company’s own Tizen software from Google’s Android. While the change is optional, the switch conveys the South Korean company’s interests in bolstering Tizen so it can reduce its dependence on Android.
I’m sure Google is super happy about this.
Google has Nest, Apple has HomeKit and Samsung has…SmartThings, we’re hearing. The deal was completed for around $200 million dollars, though it might have been less according to one source.
SmartThings is in the home automation space, and allows you to connect devices like lights and doorlocks to a system controlled by your mobile phone. It has raised over $15 millionfrom investors including Greylock, Highland Capital, First Round Capital, SV Angel, Lerer Ventures, Yuri Milner’s Start Fund, David Tisch, A-Grade Investments, CrunchFund* and Box Group.
But what’s happened for PCs and smartphones and, to a large extent, mobile networks is that it’s that top layer of the stack, that the PC and Android OEMs and operators struggle to play in, that’s where most of the differentiation happens. That’s the stuff that makes the difference between a commodity and something unique. This is obviously something of a wrench. After all, especially for the phone companies and mobile operators, this is what they always felt they should be doing, and now other people are doing it instead, free-riding on top of their work and their investment.
Ultimately, though, Samsung’s fundamental problem is that they have no software-based differentiation, which means in the long run all they can do is compete on price. Perhaps they should ask HP or Dell how that goes.
And they don’t really have any good options to help mitigate this either, particularly on the software side. There’s been chatter for some time now about Tizen and they’re already developing phones that run it. But that’s an enormous undertaking and would no doubt lead to significant churn while they build up the quality (and quantity) of their own app store.
Samsung has never been in the high-end product game though, in any vertical. So maybe it’s not surprising that they weren’t quite prepared to compete with Apple on their own turf, so to speak.
I imagine this will have a follow-on effect in the startup world and you’ll see teams further entrench themselves into the iOS ecosystem, continuing to prioritize iOS over Android in a major way.
Good read on the ongoing Apple/Samsung patent wars. Doesn’t get too far in the weeds and provides a lot of interesting backstory that folks might not be aware of regarding Samsung’s deliberate history of skirting authorities and regulators by copying electronic devices, colluding with competitors in price-fixing arrangements, not paying partners whose technology they’ve “borrowed,” etc. A lot of nasty stuff. You almost feel sympathy for modern-day technology patent holders, until they start going over some of the day-to-day stuff in court and you realize the current system remains flimsy and not protective of anything or anyone, aside from the lawyers these companies are represented by. We need patent reform and badly; but where to begin?
Samsung’s upcoming flagship device, the Galaxy S5, will indeed ship with a fingerprint sensor, reports Samsung-focused blog SamMobile. Contrary to earlier reports which hinted at a fingerprint sensor embedded into the display, however, this latest report claims the Galaxy S5 will adopt Apple’s model by integrating the sensor into the home button.
Requires a swipe as opposed to Apple’s TouchID but essentially the same use case.
It’s unclear what concessions Google may have made on its part. The company could have, for example, agreed to work with Samsung on a Nexus device or offered other cooperation.
I don’t think Google had to make any concessions, frankly. I know there was chatter about it after CES and that Samsung would have had a bigger head start than most others. But Samsung was not in a position to start building their own platform that could compete against Google, Apple & even Microsoft. Going out on their own and trying to build their own app ecosystem, trying to wrangle developer support away from the established order was not in their best interest or Google’s, frankly. I think it just made a lot more sense for both parties to work in concert: Samsung doing what they know best in terms of hardware innovation and Google concentrating on the software side.
“This agreement with Google is highly significant for the technology industry,” said Dr. Seungho Ahn, the Head of Samsung’s Intellectual Property Center. “Samsung and Google are showing the rest of the industry that there is more to gain from cooperating than engaging in unnecessary patent disputes.”
Until they get in another patent dispute with Apple, that is. This is a way for Google (and by extension, Samsung, as they have become the face of Apple’s lawsuits) to bolster their arsenal in the continuing arms race with Cupertino.