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Is Samsung unstoppable?

On the eve of the Galaxy S4 launch we ask whether Samsung is about to tighten its grip on Android?

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On the face of it, all is rosy in the Android garden. According to analysts, Gartner, Android increased its market share by almost 20% in the last quarter, compared to same period last year, to 122,480,000 units sold, capturing a world-wide market share of 72.4%.

Market leader within the pack of attendant manufacturers is Samsung, selling almost 987 million devices in the same period to effect 22.9% of the worldwide market, gaining the No 1 spot in the market share league table.

If you dig a little deeper into the figures, however, there are worrying concerns.

To begin, Samsung also holds 40% of the Android market with its nearest competitors taking around 10% while, even on a national level analysts, Uswitch, regularly has as many as five Samsung mobile phones occupying the Top 10 smartphone sellers slots in the UK. Check out the revenue streams from other Android manufacturers and it seems that, despite the general Android success, the only company actually making money from the operating system is Samsung.

Francisco Jeronimo, research manager for European mobile devices at IDC, confirmed that view, “For the next couple of years it will be Samsung dominating growth, unless Google does something with Android and focuses more on Motorola. For the time being, I don’t see any other vendors with such strong investment and capacity to push Android.’

Does this translate to a problem lurking on the horizon? Is Samsung becoming too big for Android? More to the point, does Samsung’s dominance place Android under threat? Geoff Blaber, director of devices and platforms at CCS Insight argues Samsung’s dominance of Android could end up a problem if, for example, the Korean manufacturer’s attention moves elsewhere.

“Samsung accounts for around 40% of Android’s volume.There’s a huge reliance on one player and if you take the S III out of the equation, Android is not as strong at the top end as Google would want it to be. Apple still dominates the premium market. Should Samsung start to switch allegiances, it would have serious implications for Android.”

The relatively low revenue streams from Android has certainly pushed HTC towards greater  investment in the Windows Phone operating system alongside Nokia.

This leaves Samsung in an odd situation. It is already a dominant player within the Android universe and, by licensing the free Android OS from Google, Samsung saves itself millions of dollars in software development costs and license fees but, then again, leaves itself dependent on Google. “It comes down to this sense of what it is Samsung wants to be,” said Tony Cripps, principal analyst at Ovum. “Do they really want to be one of the power players or are they happy enabling someone else’s ecosystem?”

The difference between it and the likes of HTC, for example, is that Samsung is not just a phone maker, it does have, “…the potential to create platforms which deliver content and web services to TVs, PC, phones and media players and connect them,” said Caroline Gabriel, research director at Rethink Technology Research.

This is Samsung’s competitive advantage, said Gabriel, as the world shifts more to web-based technologies like HTML5, which reduce the relevance of individual operating systems and platforms like Apple’s iOS and Android. Instead, applications will be more like web pages, which can run on any device. Samsung can draw on its extensive supply chain, manufacturing capability and research and development facilities to make this happen.

For now, no one denies Samsung’s pre-eminence and it is thought that Samsung is more than happy to reap the Android benefits but in five years’ time, we may see Samsung picking up its ball and going it alone. And what happens if in the meantime the other main players decide their Android businesses are no longer viable, and decide to turn their attentions elsewhere? For Android competition is not only healthy, it’s essential.

Written by Paul Rigby

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