How Samsung ate the smartphone industry - and now Google threatens

Like Dr. Frankenstein in his lab, Google created a monster. And now this monster is frantically worn, terrorizing the smartphone industry and even threatens the life of its creator.



With the help of its Android operating system and favorable terms of cooperation, Google gave Samsung the opportunity to become the dominant smartphone manufacturer in the world. In 2012, the Korean manufacturer of Galaxy devices put 215 million smartphones on the market, which is about 40% of the global market. As a result, a number of competitors are breathing their last, the patent wars are under way in the courts, and the stores offer an assortment of Android devices of impressive proportions.

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According to The Wall Street Journal, Google is now very concerned about Samsung’s dominant role among manufacturers of Android smartphones. Such a position of strength allows Samsung to demand from Google more and more profitable conditions for sharing revenue from the mobile advertising market, installing more and more of its own applications on its smartphones and tablets (which, in turn, displaces Google’s own applications to the periphery) or even create a branch of Android (similar to what Amazon did with the Kindle Fire) that will finally remove Google from the scene.



Google has every reason to be worried. But not only hers.

Crushing

Take stock manufacturers of smartphones. What do we see? Since mid-2011, the two companies have subjugated the entire market, and the rest barely make ends meet. Samsung is the first, Apple is the second. Almost everyone else at the moment - extras.







Google’s concern is that Samsung is squeezing the business of other viable Android manufacturers. Yes, Google has benefited from the growth of Android in general, but over the past two years, this growth has been mainly due to Samsung. Look at the Motorola and HTC, and you will immediately see the results.



In 2009, Motorola released, perhaps, the first popular Android-smartphone - the original Droid for Verizon. It sold well and quickly turned out to be favored by many ordinary consumers and technographers, who for some reason did not agree with Apple's iPhone. The next popular smartphone on Android was the HTC Evo, and Google’s real mobile take-off began with it. Evo was one of the first smartphones to acquaint the consumer with the concept of 4G (although formally it was not 4G, but WiMax) and a large screen. Then HTC released the Nexus One and Droid Incredible and finally became the main pet of the smartphone industry at that time.



But in the yard in 2010. Samsung launches its first significant Android smartphone, the Galaxy S. It is offered by four major operators in the United States. Meanwhile, it is believed that Samsung was late for the Android party. At that time, smartphone makers tended to promote devices through individual operators on exclusive terms (iPhone was only available from AT & T, HTC Evo from Sprint, Incredible from Verizon).



Samsung destroyed this model and did not even look back.



When deploying the Galaxy family, Samsung worked with operators to adapt each device to their requirements. For example, the Galaxy S Captivate for AT & T was somewhat different from the Fascinate model for Verizon. However, in fact it was the same phone. Then came the real flood. Like the Big Bang, Samsung has overwhelmed the entire known universe (that is, the whole world) with its “galaxies”. Galaxy were all sizes and shapes, the most different prices and quality. Samsung released them like mad.







The rest of the Android industry still didn’t understand what had happened, and by mid-2011, when Galaxy S II was released, it was too late to stop this wave. S II was considered the best Android-smartphone of the year (and depending on your attitude towards the iPhone 4S, the best smartphone of the year in general). He sold accordingly. In the meantime, HTC struggled to repeat its early successes, but at the same time it made big bets on weak devices like Thundebolt. Motorola, although it released the innovative Atrix with the title of the best smartphone at CES 2011, did not have the necessary scale to compete with Samsung. By the end of the summer of 2011, Google bought Motorola and its patents for $ 12 billion.



Samsung continued to fire from all guns, presenting such flagships as the Galaxy S III, Galaxy Note and Note II, as well as two Nexus devices under a contract with Google - the Galaxy Nexus and Nexus S.

Marking territory

Samsung's takeoff has confused not only its potential competitors in the Android shop. Alarmed the entire smartphone industry. The most vulnerable players began to leave first.



The list of goals was headed by the strongest smartphone players of the previous decade - RIM (now BlackBerry) and Nokia. It was in their land of Apple and Samsung began the construction of their empires. The iPhone has become a major curse for BlackBerry, depriving it of its share in the home market of North America and in Western Europe, depriving it of consumers in the corporate and public sectors. In turn, Samsung focused on Nokia, depriving it of the title of the leading manufacturer of cellular phones in the world.



In early 2011, new Nokia CEO Stephen Ilop wrote his famous note on the “burning platform”. Among other things, he wrote:

Chinese OEMs deliver the device much faster than “a PowerPoint presentation is being prepared,” as one Nokia employee said, only partly as a joke. These devices are fast, cheap and dangerous for us.

Ilop was partly right. Asian manufacturers with might and main ate a Nokia breakfast (as well as lunch with dinner). Companies like ZTE, Huawei and LG performed all cycles and deployments faster than Nokia could have dreamed of. They created their own feudal empires in Android Earth. But the main threat for Nokia came not from China, but from South Korea.



First, by the end of 2011, Samsung dropped Nokia from the pedestal in the smartphone sector thanks to the Galaxy series. There was little surprise in this, given that Nokia for several years has not done anything interesting to compete with the iPhone and Android. Then Samsung took Nokia first place in the entire telephone industry, as the share of regular phones (non-smartphones) has already begun to decline. In early 2012, Nokia’s share in emerging markets began to decline. While Nokia was slow, thought about its next step and eventually turned to Microsoft and Windows Phone, Samsung hit the sore point.

Apple Call

HTC, Nokia, Motorola, BlackBerry ... they were all swept away by a hurricane called Samsung. In varying degrees, Samsung beat them on innovation, functionality, interface solutions, distribution, advertising or marketing. As a result, there was only one smartphone maker able to challenge Samsung’s claims globally.



Apple



To its credit, Apple is worth noting that she realized quite early that it was Samsung that represented the main threat to its flourishing mobile empire. In an effort to slow down Samsung (and to a lesser extent other Android manufacturers), Apple went to court, armed with a patent portfolio.



You can think of anything about Apple CEO Steve Jobs and his "thermonuclear war" with Android , supposedly a "stolen product." It is well known from history that iOS and Android were developed by Apple and Google almost at the same time, in Cupertino and Mountain View, respectively, since 2003. Apple may rant about moral issues as much as she pleases. In reality, Apple’s patent claims against Samsung were simply tactics aimed at curbing Galaxy’s explosive growth.



Many technology experts grumbled at Apple because of these patent wars. But maybe they should thank Apple for the much-needed containment of the growth of the Samsung empire. The Korean company, in turn, kept Apple.



Be that as it may, today we have a duopoly of two manufacturers of smartphones. And this is bad for business.

Google role

Probably, Google and did not create a monster Samsung, but only allowed him to become what he became. And now, Google is looking at this colossus and shaking with fear.



What can Google do? In many ways, a strong Samsung is the best friend for Google. Samsung spurs the growth of Android penetration and pushes the boundaries of design and innovation. But when Samsung started cannibalizing other parts of the Android ecosystem, Google had problems.



The answer begins with Motorola. Google gradually realized that buying a once powerful phone maker was more than its 17,000 patents. Now Google needs nothing less than the profits of Apple’s own through its own smartphones and builds. However, after buying Google Motorola, we have not yet seen anything that could fascinate consumers and shake Samsung's position.



This may change in 2013. This year we can see the first Android devices from Motorola, completely, from start to finish, developed with the participation of Google. According to rumors, this device is codenamed Motorola X. Theoretically, this could be a long-awaited change of course after Droid Razr devices, which, after its announcement in September 2012, did not succeed.



Google also has the opportunity to use its marketing department in favor of Motorola and other Android manufacturers. In many ways, Samsung’s rise is explained by the smart and penetrating marketing of the Galaxy S and Note devices, especially when it throws stones at Apple’s garden. Samsung’s marketing and advertising budget is much larger than that of the HTC. If Google really wants the success of other Android manufacturers, it should help them in terms of advertising, marketing and development in order to raise the overall level of Samsung alternatives.



And this creates a dilemma. If Google begins to actively help other Android manufacturers, it risks pushing Samsung away and attracting all the troubles that The Wall Street Journal wrote about.



And here a more serious question arises: can Google take control of Android at all? She could not prevent Amazon from creating a branch of Android and removing Google from the equation. Is it at least able to oppose the domination of Samsung?