Wall Street Journal: Samsung’s Android Dominance Beginning To Worry Google Execs

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Samsung’s global domination of the Android platform is, on the one hand a testimony to the strength of both Android and Samsung together. On the other hand, it’s leading Google execs to worry that Samsung’s lions share of the Android market (about 40%) could lead to Samsung renegotiating their contract with Google and leveraging their market share to do so. For its part, Google is taking meetings this week during Mobile World Congress in Barcelona with other Android OEM partners to help keep Samsung’s leverage in check. Google wants legitimate competition from the likes of HTC and even HP.

Google’s Android chief Andy Rubin has publicly praised Samsung’s success with the Android platform and their more than 213 million shipped Android devices have helped boost Google’s own mobile-ad revenue. However, Rubin is equally concerned that Samsung could become too large for Google’s own good, which is leading many to believe is the reason for Google’s pursuit of Motorola. Google’s concern isn’t unfounded as recent analytics show Samsung has grabbed 39.6% of the global Android market. Samsung’s biggest competition isn’t even another Android manufacturer, it’s Apple and their 136.8 million iPhones shipping in 2012 leading to 25.1% of the smartphone market.

The bottom line for Google is their fear that Samsung will begin to demand a greater share of online-advertising revenue that Google generates and is Google’s biggest revenue source. In the past Samsung has received 10% of the mobile-ad revenue, but Samsung has signaled to Google that eventually it will want more. Samsung could take the opportunity to press Google and use its market share dominance to receive “better versions of Android software before other manufacturers.”

It’s these concerns out of Google that leads us to Motorola and the opportunity Google has to produce hardware in-house in a similar fashion to how Apple produces the iPhone. With total control of the hardware and software, Google could make superior devices. However, that also leads to concerns that such a move would alienate alternative Android manufacturers and Google has promised not to show Motorola favoritism. If Motorola’s “X-Phone” is in fact a real device and if its purpose is to directly compete with flagship devices like the iPhone and Galaxy series, Google could begin moving toward reducing Samsung’s leveraging power while still maintaining Android’s superiority.

So just how powerful is Samsung in all of this? Well, take a look at this Strategy Analytics infographic below showing Samsung’s 213,000,000 million phones sold last year. That’s more than the total population of Brazil, so just think about that for a minute. With the release of the Galaxy Note 8.0, Galaxy S IV in two weeks and eventually the Galaxy Note III later this year, Samsung is poised to continue taking over the smartphone world.

Wall Street Journal, Samsung Tomorrow

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  • qpinto

    Samsung is the only manufacturer that has released top end android devices across all carriers. Why would we expect anything else? That can’t be said about any other company with carrier exclusive deals here in the us. Cough cough HTC, Motorola, LG…

    • Get_at_Me

      Exactly…. Samsung has adopted Apples distribution model (all carriers sell their best devices). HTC, LG and others had/have the same opportunity but chose to do exclusive deals with particular carriers. Youre not a legitimate contender using that model. Its also safe to say we prob wont be seeing any Samsung Nexus devices any time soon. Google may begin to alienate Samsung and support other OEMs.

      • Spanky

        Samsung has already had 3 Nexus devices (Nexus S, Galaxy Nexus, Nexus 10). As much as I like those devices, I’d like to see some other OEMs have a shot.

      • superg05

        you got that backwards Samsung did it before apple so its the other way around

        • http://profiles.google.com/mrice.hill Mr. Hill

          Pretty sure Apple did it first with the iPhone 4S in the US. At that time Samsung released the GS2 and each model was different on every carrier and Verizon didn’t even carry it.

    • earzkick

      I agree, carrier exclusives don’t generate nearly as much add an across the board release. Even the great Apple recognizes this.

    • david brand

      I disagree. The only thing Samsung did was release the same phone on all carriers with the same names. HTC DID release top end phones across all carriers as well, they were essentially the same phone, named differently. HTC will release the same phone across all carriers with the ONE next month. But honestly i dont think it has anything to do with that. Samsung has an awesome marketing strategy with commercials and ads everywhere. The other companies do not. If HTC makes an awesome marketing campaign with catchy commercials Samsung would lose steam. After all if Apple has proven anything, marketing is everything. Theyve been selling crap since 2007 with commercials alone.

      • qpinto

        ill agree with you on marketing is key. apple has it down. most people still associate android with “droid.” Verizon does a lot of brand marketing and it has paid off.

        Lets go down a quick list i can think of for the US of top tier phones sold via carriers which proves my point:

        Samsung. SGS 1, SGS 2,, SGS 3 are on all major carriers. Galaxy Note 1 was on ATT and then Tmo after awhile, but the Galaxy Note 2 is on Tmo, Att, Sprint, and Verizon.

        HTC: Evo 4g (sprint exclusive), Evo 3D (sprint exclusive), HTC Sensation (Tmo exclusive), HTC DNA (Verizon exclusive), HTC One X (Att exclusive) One X+ (att exclusive) G1/Dream series (Tmobile exclusive), G2(Tmo exclusive)

        LG : G2x (Tmo exclusive), LG Thrill (Verizon), Optimus G (Att, Sprint, Verizon), Intuition [GN competitor] (Verizon)

        Motorola : Atrix (Att), Atrix 2 (Att), Razr (Verizon), Razr Maxx (Verizon), Razr HD (Verizon), Droid X (Verizon), Droid 1 (Verizon), Droid 2 (verizon) Groid Global (verizon)

        Sony: Xperia XL (Att), Xperia (Att)

        Most of these cool phones are carrier specific unless you want to import them for gsm versions unlocked. samsung has it all across the board. name another manufacture that has done the same.

        • david brand

          My point is that most of the HTC phones even though named different and having slightly different specs were variants of the same exact phone.

    • Jason Madura

      Plus Samsung puts out devices that are completely revolutionary in the Android mobile industry, i.e.- Galaxy S3, Galaxy Note and Note 2, etc…… Samsung has consistently placed the absolute BEST AND CUTTING EDGE technology in their devices time and time again, while the rest of the other manufacturers replicate this pattern a quarter or two later after seeing how it “pans out” with Sammy so they don’t take a financial hit if it fails. Samsung is revolutionary and not afraid to be bold in the face of adversity, EXACTLY LIKE GOOGLE. Maybe this is one of the reasons why they pair so well together and continue to absolutely DOMINATE this market…. Same mentality and same approach, same dominating results.

      • lovingmyGN2

        I like your breakdown.

  • archerian

    Samsung has Bada and other OSes in the pipeline too. For the next 1B new smartphone users, as long as the major apps like email, FB and Twitter are present and the phone has good hardware and a stable supported OS, it can be any OS running on their devices. Samsung has a global presence, rich legacy of electronic and electrical manufacturing and spending on R&D. Something not many other companies really have.

    • WW

      Most mid-range feature phones have those (e-mail, FB, Twitter) functions.

  • http://profiles.google.com/mrice.hill Mr. Hill

    Samsung has a marketing budget larger than Apple, Microsoft, HP, Coca-Cola, and Dell all combined. Most of these phones have similar specs and functions these days so it’s mostly about how well a company can market the device. None of the other Android OEMs will ever be able to catch them except possibly Google if they put enough marketing money behind Motorola and release a single flagship device across all carriers.

    • Chris

      Yep! Samsung is putting out ads almost every week since the start of the year, leading up to the super bowl, and up til now. Some are released on youtube first (before tv ads ran) and they just post the links on facebook/google+/twitter. And the videos just go viral. They have also put some sort of story on their ads making people want to wait for the next ad. It’s really clever what samsung did. I don’t blame them for being number one and I don’t blame Google for worrying. Google wants Android to grow (continue innovating). If samsung holds the majority of the market and people only trusts samsung, samsung could just start doing a feature by feature release similar to what apple did and just slow down innovation.

    • david brand

      Agreed marketing is everything. People only buy stuff thats being flashed in front of their eyes 24/7. people are dumb like that.

  • Ajay

    Want to keep samsung in check, Listen to needs of customers. Fast phone , removable large battery and expandable memory. Thats all companies need. I prefer HTC but had to go to Samsung because it was a better fit.

    • Aaron Peromsik

      Good points. Google doesn’t like expandable memory. But customers do. They need to come to terms with that.

      • lovingmyGN2

        And that had been Samsungs modo listen to there customers and give them what they want.

    • opunku

      I feel the same. Still love the mytouch 4g, but starting to out grow it. The HTC one is on the top of the list, but have a hard time with no SD card and non removable battery. Samsung? HTC?

      • WW

        Don’t count out LG with the beautifully priced Nexus 4 if you’re considering the HTC One with those same limiting features.

    • WW

      Just about everyone has expandable memory. Integrated batteries seems to be a minor anti-consumer trend but it’ll never become universal in the Android world. Freedom of choice is the strength of Android.

      It’s ironic that Google themselves are the ones taking away choice (universal non-expandable memory) with their Nexus products.

      It would be nice to see more removable batteries in the tablet arena (I think Toshiba was the only major player that had a tab with removable battery).

  • Juan Pablo Darquea

    True HTC made deals of exclusive phones Samsung in the other hand has the s3 even for metro pcs that’s why they dominate the other company is are scared of fealure love my HTC one s but one the X version not on tmobile HTC you lose

  • UMA_Fan

    I don’t think Samsung has true legitimate ‘leverage.’

    Customers will NOT follow Samsung if the Galaxy S V (let’s say) is not powered by Android. Then again, the thing Samsung could do to get Google really scared is use Android without Google services. Samsung could have their own app store similarly to how Amazon’s kindle fire works.

    • MatthewMurawski

      Yes but everyone hates Amazon’s App Store… lol

    • qpinto

      if samsung changes the OS but keeps touchwiz to work the same, people wont care. as long as they have the apps they use on a daily basis (facebook, twitter, share shot, etc).

  • Chris

    I see the point about Samsung asking for more ad revenue (I didn’t know they got any), but besides that, I wouldn’t think google would care who is doing good/bad with android as long as android is doing good overall, which it is.

  • tonkotsu

    No worries, Samsung has no idea how to developed decent software, and may take decades to match either of the app stores currently. If anything, we should be worried about Google’s Motorola phone. It, unlike Samsung, provides an unfair advantage vs everyone else. In the long run, its Samsung and the other manufacturers that need to worry about Google, since their own software is so poor.

    • Spanky

      I am extremely curious about this mythical “X Phone”. If it’ll have top-shelf specs, stock Android, and LTE compatibility, I won’t even consider other phones, especially carrier variants.

      • tonkotsu

        I’m hoping it has universal lte and paves the way for universal lte radios from international versions of phones so we can buy those instead of carrier branded ones. But knowing Google. .. We may need to wait awhile.

  • tomarone

    Where is LG in the chart? the labels for Huawei ZTE HTC and the non-labeled one seem incorrect.

  • Jefferson Josue Morales

    htc: let’s only make premium phones and give the best to 3 carriers and cheap ones to the rest …we’ll do good.

    Samsung: let’s plastic phones but large screens and sell the same model on all carriers ….we’re not losing much because it’s plastic..

    ..years later
    HTC: what’s going on! Why aren’t we selling? Are top phones are great quality on the 3 best networks..

    Samsung: …hey look at the outcome of working with everyone on our premium phones? The numbers speak for themselves…I wonder how HTC,LG and Motorola are doing?

    me on my HTC phone: ….lol ouch..still stuck on ics

    • david brand

      You do know most phones unless you bought them from december into feb dont have JB, more than 90% of android phones are on ICS, its not old, JB just came out. Ouch my ass.

      • Jefferson Josue Morales

        Ouch is right! Lol jajaja

  • Hurlamania

    I won’t buy a phone without an sd slot. Attention google, htc.
    Looks like Samsung is My only option and i want an HTC.
    This year will be my first Samsung and first non HTC phone. All because of sd slot.
    Do you hear me google,HTC…

    • david brand

      32GB internal storage is enough for 2 people, maybe 3. Get over it.

      • WW

        Besides capacity, cost and portability are strong advantages to removable media. Manufacturers rip us (consumers) off by charging $50-$100 (over the base model) for just 16GB-32GB more memory when a consumer can buy a 64GB micro-SD card for about $50.

        Consider the HTC HD7 (Windows Phone) which actually had it’s “non-removable” storage in the form of a hidden micro-SD card. No other OEM has been stupid enough to do that again…they always solder them into the board to make sure we can’t (outside of micro-SD slots) upgrade our own storage memory.

  • Enzowned

    Surely those that cry for removable battery and SD slot realize they are in the minority? Most people are past this. For better or worse, doesn’t matter. It’s about pros and cons. People have spoken, they want thinner, and they never swap SD cards. These two directly mean a manufacturer is better off implementing a non-removable battery, and saving surface space, and integrating flash storage, and more of it.

    • david brand

      Agreed, internal memory is so huge these days. Anyone that needs more than 32GB storage seriously has a problem, and phones rarely freeze anymore to have the need to remove the battery. LEts not get started on battery life either, I bring my charger everywhere, its expected. People need to get over it

      • MatthewMurawski

        Having a removable battery isn’t about “freezing” as much as it is the option to easily replace the battery if it is faulty or to be able to pop in a spare and have 2x (or even more) the battery life.

        • qpinto

          after while not having a removable battery isnt a big deal. i thought i would be in fits switching from my sgs 3 to my n4 but all is well. you kind of get used to carrying a charger. then again android is becoming even more optimized thus battery drain isnt as big of an issue as it used to be.

        • MatthewMurawski

          Carrying a charger? Sorry, but I don’t have a purse to put that in.

        • Zero0

          But you have one for a battery? Granted, a charger is slightly larger than a battery, but the Nexus 4 charger is pocket-able.

          The fact of the matter is this: non-removable batteries open up options for OEMs. They can put the battery wherever they want, allowing for phones with larger battery capacity, thinner cases, and nicer designs.

          The solution to battery problems isn’t backup batteries. It’s better batteries. Lighter, smaller batteries that last longer and charge more quickly. We’re getting there. For now, if you don’t like it, get a phone with a removable battery. Simple as that.

        • Isaac Newsome

          This is forcing hardware makers in to making longer lasting batteries and software makers into more lean programming.

    • superg05

      not really if your phone breaks you lose your photos and data unless you have a cloud backup an sd card you just pop it out and move it to another phone

      • Isaac Newsome

        Lucky for Android users, if you have Facebook or Google +, it’s automatically loaded to the cloud on the spot or over Wi-Fi. Removable media is a larger risk with damage and malfunctioning, and because you now have phones with 16gb of internal space plus cloud storage, it all makes sense. Removable media = limited life and more hassle for most people. The idea of photo and video needing to be on an SD card I’d say is obsolete due to free picture and video storage from the likes of Facebook and Google, and anything else will fit on the device. Music is mostly steamed or saved in lockers. It’s about doing more with less.

  • kev2684

    also, agressive marketing is helping Samsung a lot. have you seen the oscars? they ran the whole unicorn apocalypse ad series featuring the Galaxy Note II, Galaxy S III and Galaxy Note 10.1. about 40 million people saw at least 1 of the 6 Samsung Galaxy ads they aired last sunday. Unicorn Apocalypse was a trending topic at twitter last sunday too.

  • Nick

    I’d love to drop Sammy and go back to HTC, the build quality isn’t as nice (plastic vs metal). I was waiting for the G Nexus, but seeing how gimped it was (vs the S2) I waited for the S3. I still wasn’t impressed, got the Note 2.
    Google had a hand in gimping the G Nexus (ah hem, microSD card slot?) But the camera and the 1.2GHz vs a 1.5? just didn’t make sense, unless it was a licensing greed issue on Sammy’s part.

    Wasn’t Sammy warned about working on that Chinese Android rom, if they did, they’d lose favored dev status (advanced OS copies)? It seems Google already has a plan B

  • Richard Yarrell

    Personally Google has gotten to big for it’s britches. I have hit up direct messages to certain people inside Google directly as well as certain people on Google Plus and twitter i don’t like name dropping but the topic is big. Years ago when android wasn’t worth spit and nobody wanted to take a chance on android tmobile came along and helped that cause not Verizon, At@t, or Sprint. The G1 on tmobile started android the hallmark of android was removable batteries and sdcard expansion now today Google is trying to force OEM’S to produce handsets such as it’s pitiful Nexus line devices with no storage options and removable battery options. Google is trying to force it’s useless chrome browser on all devices 4.1.1 or Nexus/Moto devices, Bottom line here is Google has lost their way and believe they can control android that will never happen. Android is open source and always will be OEM’S can add their flavor of android as they seem fit. It’s the consumers who determine how successful android is or how successful any particular OEM will be for that matter. Clearly the world has spoken when you sell 213 million smartphones in 2012 and have 40% market share proves that you are head and shoulders above the rest and those customers who purchased those devices purchased them for a very reason. Samsung has earned it’s place by being innovative and bringing products to market that they understand their customers want and need. People who purchase Samsung products purchase those products knowing full well that they will have industry leading software and features solution that’s unmatched from any manufacturer. 90% of Samsung customers are people who are repeat customers and keep coming back cause they know what to respect and won’t go elsewhere. For me as well as many other the love for Samsung devices has stretched to household items as well my 50 inch flat screen is made by Samsung and so is my refrigerator so yes Samsung is beyond large. The hallmark of android is choice and Google is not allowing that to remain as it started years ago. What Google should do is have a meeting with all the other pitiful manufacturers who aren’t pulling their weight for the platform Htc, Lg, Sony, Motorola, and of course add themselves with the sorry Nexus line of device and make a plan that will produce better devices with what the people want not what you think they should have. Google has done nothing to help Samsung they advertise their own devices, they market and create their own devices and software in handsets. Samsung is far more innovative than Google ever will be. Paying 10% revenue to your top manufacturer on the platform sounds like total greed in the Google camp Samsung deserves much more. Bottom line here goes back to what i have told others not only here on this site but on Google’s direct Google Plus Page as well as it’s twitter page and pounded it’s facebook page to Samsung is android plain and simple. If they stood up to Apple what makes them think they won’t stand up to them of course they will it’s a business for everyone involved and all the players are not pulling their weight in the android world. If Samsung was to leave android all it’s users will leave your platform barren. The same thing Google provides Samsung can do to youtube, maps, whatever services can be done by Samsung too. Personally what Google needs to do is focus on it’s sorry Nexus line that’s really nobody wants and focus on that useless purchase of Motorola which if i was Moto i would’ve ran the other way and gather up all the players and get their acts together cause collectively they are all pitiful. When the closest android manufacturer to Samsung is Hauwei at 6% market share what does that tell you about the level of pitifulness. If I was Google I’d shut the hell up and keep getting paid for your android market and services before you piss off someone and start a war you won’t win.

    • Richard Yarrell

      I applaud Samsung for standing up for their brand and it’s customers when Google tried intimidation tactics. Trying to force that crappy chrome browser Samsung said NO we will use our own stock browser. When Google tried to force them to eliminate sdcard expansion Samsung said NO our customers rely on that feature on Samsung devices. When Google tried to forced them to make handsets were the battery can’t be removed Samsung again said NO that is not how we want to create or make our devices. After all this time it’s pretty clear what Samsung cares must about and what Google cares most about and sadly they aren’t on the same page. Samsung earned it’s place in the technology game and have far more customers than any other manufacturer that’s pretty obvious. What Google needs to do is protect android better as well as the manufacturers who create for android didn’t see anyone from Google in any court room when Htc and Samsung was going up against Apple. Google just wanted to stick behind the scenes. Message to Google don’t bite the hand that’s feeding you your never as good as your manufacturers.

      • Zero0

        Google never forced anyone to do any of those things.

        Chrome is the new default browser. Whoop-de-freaking-doo. Don’t like it? Download Firefox or Opera or Dolphin or any number of alternatives. Welcome to the free ecosystem.

        I’m not entirely sure that Google _could_ jump into the court cases, in any event. A lot of those were based on hardware or on manufacturer software. That’s out of Google’s jurisdiction, and, with antitrust the way it is now, could endanger Google.

        As for their “sorry Nexus line,” I can’t even. The Nexus 4 is absolutely the best value in the entire mobile market. No one comes close. The Nexus 7 showed that “budget tablet” doesn’t mean “crap tablet.” The Nexus 10 has an incredible screen, still at an incredible price. And if you don’t like it? Again, get something else.