Samsung is facing increased scrutiny from Apple Inc. (NASDAQ:AAPL) and is concerned about its own over-reliance on Google Inc (NASDAQ:GOOG). That’s left it with few choices, so it’s increasingly looking to go it alone, a risky proposition.
Friends and Enemies
Samsung and Apple Inc. (NASDAQ:AAPL) became close friends when the Korean giant stepped up to provide key parts for the iPod. As that product grew in popularity, so too did the relationship between the two partners. When the iPhone came out, Samsung’s involvement was a given.
Since that time, however, Samsung has brought out its own competing products. They look remarkably similar to Apple’s iPhones and iPads. They are the only truly competitive offerings to Apple Inc. (NASDAQ:AAPL) in the market, which recently announced that it would start to shift some of its chip needs to a new supplier. Although the two will continue to do business, it’s clear that Apple wants to diversify away from a partner that is also a competitor.
Google Inc (NASDAQ:GOOG)’s Android mobile operating system is the foundation on which Samsung has based its most popular products. However, that’s a big risk, since Google is also in the cell phone space and is increasingly creating other devices, too. To that end, Samsung is set to launch its own mobile OS, called Tizen later this year. That’s a risky bet to make at a difficult juncture for the company.
Going it Alone
Nokia Corporation (ADR) (NYSE:NOK) tried to create its own OS and failed. It essentially gave up on the effort and, instead, partnered with Microsoft Corporation (NASDAQ:MSFT) to create a Windows Mobile based phone. The Lumia has been well received, but hasn’t sold particularly well. That’s one reason to avoid Nokia Corporation (ADR) (NYSE:NOK), which has been shedding market share for years in developed markets and faces a long road to turn things around, if it can.
Revenues falling since 2007, losing money in each of the last two years, and eliminating its dividend to help shore up its finances are other good reasons to stay away. It’s also a warning for Samsung that building your own OS is hard to do and even if you do build it, it could be hard to get customers to use it.
One Advantage that Samsung has over Nokia Corporation (ADR) (NYSE:NOK) and Microsoft Corporation (NASDAQ:MSFT) in this effort is a massive installed base of customers. Since so many people know Samsung’s Galaxy line as the “hot brand,” getting users to try out Tizen may not be as hard as Nokia Corporation (ADR) (NYSE:NOK) trying to win back customers. However, if Tizen disappoints, Samsung could have a public relations nightmare on its hands.