Galaxy S4: Samsung's so far ahead in the Android race, should it start worrying?

Galaxy S4: Samsung's so far ahead in the Android race, should it start worrying?

Summary: Samsung is the unchallenged king of Android handsets. So where can it go next?

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As it prepares to launch its next flagship smartphone, the Galaxy S4, Samsung stands as the dominant player in the Android market.

The South Korean company accounts for 42.5 percent of Android sales; its nearest competitor has just six percent of the market.

It ended 2012 as number one in both worldwide smartphone sales and overall mobile phone sales according to analyst Gartner. Assuming Samsung makes a successful launch of the Galaxy S4, its lead in the Android smartphone market may even be extended further.

Along with the is-or-isn't-it-a-phablet Galaxy S4, Samsung also has the Android-powered Note line as well as Chromebooks, and as Larry Dignan points out, is building a strategy around "connecting the screens of your life".

While Samsung is certainly aiming at the iPhone with the launching the Galaxy S4 — holding the event in New York is symbolically bringing the smartphone battle to Apple's home turf — Apple is not the only tech giant that Samsung has to think about.

Because, while Samsung is increasingly seen as the Android smartphone company, the software platform is Google's. And the question is whether Samsung will want that situation to continue forever.

Already this has led to fears within Google that the South Korean smartphone maker may "flex its muscles" to renegotiate the pair's commercial terms, according to a report in the Wall Street Journal.

Does success need an ecosystem?

While Samsung continues to grow its smartphone sales, it's undermining its own position in the broader ecosystem by providing Google a huge mobile platform from which to influence consumers, application developers and advertisers, according to Tony Cripps, device analyst at researchers Ovum.

It's very difficult for Samsung to achieve a similar level of influence itself while it depends on Google to supply the software, key applications and services through Android, he said.

That's not necessarily a problem if Samsung is happy in that role. But lacking a powerful ecosystem of its own clearly positions the company lower down in the value chain than either Google or Apple, Cripps warned.

Samsung has to decide what it wants to be in the long run, he said. "Is it just the biggest provider of Android devices into the market and doing very nicely financially, or does it feel the need to increase the value of its product and its broader ecosystem by taking some kind of ownership around the software platform?"

One alternative to Android that Samsung's already considering is Tizen - an open source operating system designed to run on smartphones as well as tablets, netbooks, TVs and in-car systems.

The Tizen option

Samsung is expected to release Tizen-based handsets later this year, a move seen by many as a hedge against over-reliance on Android. Other Tizen supporters include Intel, Vodafone, Orange, Sprint and Huawei.

"Tizen is strategically very important to Samsung because the success or otherwise of that platform in the market is going determine to a greater or lesser extent which way Samsung is able to go in the future," said Cripps.

Using Tizen in a future high-profile phone could offer differentiation that is harder to attain with Android (although part of Samsung's success has been in building interesting or useful tools on top of the OS).

But, if Samsung is to take on Tizen, its adoption must come on a large scale. "It needs to be if Tizen is going to make the crossover from being a niche platform to one where it can make inroads against the big guys," Cripps said.

The smartphone market however is much more crowded than it was few years ago - and, as Nokia and BlackBerry have found, trying to get critical mass behind a minority ecosystem can take a lot of time and money with little guarantee of success. As such, as long as Samsung's dominance of Android remains unchallenged, it is unlikely to be tempted to push for radical change.

Right now, it isn't seeing a huge threat from the other Android players such as HTC (although Jason Hiner sees the competition hotting up faster than I do). Similarly, Google's acquisition of Motorola hasn't delivered the wow yet - although it might do this year, which might make things a little more complicated should Google begin to pose more of a threat in hardware and start competing against its customers in a more meaningful way.

In some respects it may be that - ignoring the technology altogether - Samsung has already won the most important war; that of branding. As Gartner analyst Anshul Gupta recently pointed out the Android brand is being overshadowed by Samsung's brand "with the Galaxy name nearly a synonym for Android phones in consumers' mind share". Perhaps it's Google, not Samsung, that should be worried by Samsung's dominance of Android.

Topics: Smartphones, Android, Mobility, Samsung

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24 comments
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  • I don't see a need

    to dig for a problem amidst such an overwhelming success. The reason Samsung succeeded is because they released the best product at a good price, and the consumer market naturally gravitated towards it. And the reason they succeed is because they have the resources to test the market with different products, and when they have a winner like the Galaxy S series they put their weight behind it.

    Tizen is just another option they will be testing just as they have with Android and Windows operating systems. If it fails it will not bring the company down, and if it succeeds they will reap the benefits.
    Michael Kelly
  • Samsung doesn't want to be the biggest Android OEM

    "Samsung is the unchallenged king of Android handsets. So where can it go next?"

    Android is a tool, not an end goal.

    So where can it go next? How about 90% marketshare? How about slowly but surely eroding ios marketshare down to 5% and aapl down to $20?

    If Samsung can do this with Android, Samsung is happy. If Samsung can do this with Tizen, Samsung is happy. If Samsung can do this with Windows Phone, Samsung is happy.

    Most people who buy the Note II and the S3 are buying Samsung phones, not Android phones.

    Personally, I think it is Google that should be concerned although I can't imagine they make THAT much money from Android so even then, I doubt Google cares THAT much.
    toddbottom3
    • Re: Most people who buy the Note II and the S3 are buying Samsung phones, n

      If that were true, then why are Samsung's Windows Phone models not selling?

      Clearly there's a bit more to it than just the Samsung name...
      ldo17
      • There are theories out there

        http://bgr.com/2013/03/13/samsung-windows-8-competitor-373353/

        "If it looks as though Samsung (005930) isn’t putting that much effort into selling Windows-based devices, that might be because it isn’t"

        The Samsung ATIV was a 6 month old repackaged Galaxy S3 that was never advertised.

        But let me turn the question on you:
        If Android sells itself, why have LG, Motorola, and HTC totally failed to sell Android phones?

        Clearly there's a lot more to Samsung's success than Android.
        toddbottom3
        • Re: There are theories out there

          Sounds like circular reasoning to me: Windows can't be an inferior product, therefore it must Samsung's fault. And coincidentally also HTC's fault, and the fault of all the other Windows Phone OEMs.

          As for being a "repackaged Galaxy S3"--it's funny how that same hardware makes for the world's best-selling smartphone when you put Android on it, but switch the OS to Windows Phone and suddenly the customers lose interest. Almost like it wasn't the hardware at fault, but the software...
          ldo17
          • It isn't my reasoning

            I don't even really buy the whole "Samsung is doing this on purpose to eliminate a competitor to Tizen" conspiracy part. However, it is simply undeniable that Samsung advertises their Android phones much more than they do their WP8 phones. And that's okay, they are allowed to. However, you were asking why Samsung WP8 phones don't sell as much as their Android phones and I gave you the objective answer: Samsung doesn't advertise them as much.

            "And coincidentally also HTC's fault, and the fault of all the other Windows Phone OEMs"

            Got it. So if you can name multiple OEMs that can't sell a phone based on a certain OS, that OS must suck. Oh yeah, like Motorola can't sell Android phones, LG can't sell Android phones, and HTC can't sell Android phones.

            The difference is that I'm not suggesting Android sucks. Just because I think that people buy the excellent phones that Samsung advertises doesn't mean that I think Android sucks. It clearly doesn't. But I don't believe the thought process for MOST people goes:
            "I want to buy an Android phone. I'll compare Samsung, Motorola, LG and HTC and buy the one I like the most."

            I believe the tought process for MOST people goes:
            "Oooo, I saw a nice Samsung phone advertised. My friend has a Samsung phone that he really likes. I think it was called a galaxy something? I'll go to my local store and ask them if they have something called a galaxy."
            toddbottom3
          • Re: Samsung doesn't advertise them as much.

            Why should Samsung's ads specifically mention Windows Phone? After all, they don't specifically mention Android. So if the ads are working as you say, the customers should simply go into the shops and snap up all the ones saying "Samsung", right?

            But they don't. They pick up the Android models and avoid the Windows Phone ones.
            ldo17
          • Samsung doesn't advertise WP8 like they do Android

            Even if you do not like WP8, you can't sit there with a straight face and say that they do.
            Michael Alan Goff
          • Re: Samsung doesn't advertise WP8 like they do Android

            I wonder why Microsoft doesn't pay these OEMs to advertise Windows Phone more? You know, like for desktop Windows, near the bottom of each PC ad, you'll see something like "Dell recommends Microsoft Windows"--Microsoft pays to have that put there. Yet they won't do the same for Windows Phone.
            ldo17
          • And thus you have debated against your initial argument

            "After all, they don't specifically mention Android."

            Exactly. They advertise Galaxy. They advertise Note. People walk into the store and ask for a Samsung Galaxy. They ask for a Samsung Note.

            "Why should Samsung's ads specifically mention Windows Phone?"

            I never said they should mention Windows Phone. Samsung doesn't advertise ATIV. Samsung advertises Galaxy. Samsung advertises Note. So people buy the Samsung called Galaxy. They buy the Samsung called Note. They don't buy the Samsung they've never heard of: the ATIV. At no point is the OS important. Like YOU said:

            "After all, they don't specifically mention Android."
            toddbottom3
          • Re: They advertise Galaxy. They advertise Note.

            Do the punters come home from Harvey Norman and say to their mates "I bought a new Galaxy"? "I bought a new Note"? No, they say "I bought a new Samsung". THAT is the brand name hammered home by the ads: "Samsung", not the model names.

            So to maintain that Samsung's advertising is somehow only benefiting its Android phones and not its Windows ones is ... disingenuous.
            ldo17
          • Apple's coat tails

            The real reason behind Shamsung's success is a point BOTH of you fail to mention: Shamsung copied Apple more than the other iPhony peddlers out there, especially with the original Galaxy and the Galaxy II: http://www.droid-life.com/2012/08/08/why-it-matters-that-samsung-copied-apple-opinion/
            Jdub96
          • Re: especially with the original Galaxy and the Galaxy II

            How is that relevant to the S3 or S4?
            ldo17
    • If Samsung is so powerful then what about their Win/Bada other OSs phones?

      I think only Google has to worry at this point as Apple's share of profits and market share is not decreasing much...
      Prasad Velkuri
  • Over thinking things

    Samsung has a roadmap of profitable Android handsets. They will dabble and put R&D in Tizen or a close ecosystem when it makes sense. They will be ready for the "next opportunity" to build its own ecosystem if the risk/reward makes sense. They will not abandon he Galaxy Android cash cow till it makes sense. Why would they worry?
    flyguy29
    • Samsung has a lot to worry about

      Google is doing them a favor by letting them use their platform and they don't have to share revenue from search either. People buy S3 and Note 2 because they have already purchased Google Play Store apps and want to use it on their new device. They already familiar with Swiftkey app or Swype so they want to use it.

      Google holds all the cards. They can tell all the 3rd party vendors like Samsung to shove it if they wanted to and just use Motorola and/or LG to be their sole manufacturers for Google (er, Nexus) branded smart phones.

      Samsung also has this to worry about: they only make money from the hardware sale. Because competition in the Android sphere is so fierce, they have to keep one upping the competition year after year. Apple's position is much more fortuitous because not only do they make money from the sale of the hardware, they also get software sales. They get a cut (30%) of any apps you purchase (assuming it's from a 3rd party) and 100% of the profit if it's an Apple branded app (like iMovie, Garageband, Pages, etc).

      I'm aware that Samsung has their little music and movie hub on their Galaxy Phones, I know I have it on my S2, but I don't think it's a big money maker for them. I've never purchased it because my next Android device might not be a Samsung and I don't want to invest in it.

      Tizen is essential for Samsung. I don't view it as a hedge. It's certainly a risk, going in against Apple and Google, but I don't think they have any choice. Samsung has to get vertically integrated to maximize profits and control the experience and the only way to do that is to have their own platform. Also, having their own OS allows them to control their own destiny.
      Maha888
  • I agree

    I have a Note II and it is a great phone, but it has a lot of features that differentiate it from other Android phones. The underlying software is a means to an end. Samsung provides an excellent combination of features and usability and that is what drives sales.
    krossbow
  • They need to not have worthless upgrades ie apple

    at some point the SX becomes who cares, my S3 or S4 is fine and SX+1 isn't worth my money.
    everss02
  • Samsung wants to sell phones

    Google wants to sell advertising. If Google manage to sell advertising with android platform - the better, they will pay less to Apple (or others) to be the default search engine, make some profit out of it, and control one of the most important ecosystems of the current times.

    Google fears are about bing gaining important share, Apple replacing google services in iDevices, .... there is no evidence that the risks are withing samsung.
    AleMartin
  • Phil Schiller is an Idiot

    I LOLed when I saw the article containing Phil Schiller's comment about how Apple is better. Come on Phil, grow up you failing miserable old man. Apple is failing, and you're out to keep it afloat by spreading BS all over the web. Punk
    Ray07