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Google Inc (GOOG), Intel Corporation (INTC): Is Samsung About to Abandon Android?

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SAMSUNG ELECT LTD(F) (OTCMKTS:SSNLF)Samsung (NASDAQOTH:SSNLF) is aiming to get developers coding for Tizen. The South Korean tech giant has announced a contest: $4 million is up for grabs to any would-be developers.

Like Google Inc (NASDAQ:GOOG)‘s Android, Tizen is an open-source mobile operating system based on Linux. To date, its development has been spearheaded by Samsung and Intel Corporation (NASDAQ:INTC).

Samsung has been rumored to be planning a move away from Android in favor of Tizen. Right now, that seems unlikely, but a contest like this lends credence to that theory.

Samsung has made billions from Android

At first glance, the idea that Samsung would abandon Android seems ludicrous. Even factoring in Samsung’s recent 20% drop, shares are still up nearly 40% since the beginning of 2012.

Most of that gain has been due to the billions of dollars Samsung has raked in on its Galaxy smartphones. The Galaxy lineup, which is now on its fourth generation, has — until very recently — been the closest thing Apple Inc. (NASDAQ:AAPL)’s iPhone has had to a true competitor.

Perhaps that’s why Samsung and Apple Inc. (NASDAQ:AAPL) have been accounting for all the profit in the smartphone sector. In the first quarter of this year, Apple raked in 57% of the profit generated on mobile phones — Samsung took the other 43%.

And while Samsung’s phones are well made, they wouldn’t be what they are without Google Inc (NASDAQ:GOOG)’s Android. In fact, the release of Google Inc (NASDAQ:GOOG)’s fourth version of Android — Jelly Bean — largely coincided with the widespread adoption of Samsung’s Galaxy phones. The Galaxy S3 was the first of Samsung’s flagship phones to put up iPhone-quality numbers, and the first to run Jelly Bean.

Why Samsung might want to go in a different direction

That said, despite all the success Samsung has had with Android, the company might want to end its partnership with Google. Although Samsung is riding high today, that might not always be the case.

Because Samsung does not control the operating system, its customers can choose to go with a different Android OEM at any time. Reliance on Google Inc (NASDAQ:GOOG)’s services may keep one tied to Android, but not to Samsung. Thus today’s Galaxy S3 fan could be tomorrow’s HTC’s One owner.

Moreover, there’s the looming possibility that Google could choose to favor Motorola when it comes to Android development. Google purchased the handset maker in 2011, and though it has promised to operate the unit independently, there’s always the outside chance that Google could change its mind.

Mutually assured destruction

And perhaps that’s the real reason why Samsung keeps Tizen around — a sort of insurance policy. Should Google Inc (NASDAQ:GOOG) decide to favor Motorola, Samsung could abandon Android in favor of the in-house Tizen.

Of course, Google has much to lose if Samsung decided to abandon its mobile operating system. As much as Android advancements have helped Samsung sell more phones, Android wouldn’t have the market share it has today if it wasn’t for Samsung.

In an interview at the D11 conference, Google Inc (NASDAQ:GOOG)’s Sundar Pichai addressed the company’s relationship with Samsung.

“[We] owe a lot of success in Android to what [Samsung has] done…Today I see a pretty symbiotic relationship…[We] intend to be very close partners…We’re working on projects for next 12-18 months, collaboration is getting deeper.”

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