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Google Inc (GOOG) and Samsung: Just Bluffing

Google Inc. (GOOG)One of the most important stories in the tech scene during the last year has been the rise of Samsung as the global leader in the smartphone business, an amazing accomplishment which couldn’t have been achieved without Google Inc (NASDAQ:GOOG) and its popular Android operating system.

This alliance has been tremendously fruitful for both companies, but according to reports by the Wall Street Journal, Google may be feeling anxious about this relationship and considering different alternatives in order to reduce its risks.  Although Google has good reasons to monitor its dependency on Samsung closely, this partnership is just too profitable to be put at risk unless strictly necessary.

Google Inc (NASDAQ:GOOG) and Samsung vs. Apple Inc. (NASDAQ:AAPL)

While Apple is still the market leader in the US, Samsung has overtaken the Cupertino giant on a global scale and it has become the biggest smartphone manufacturer on the planet thanks to its variety of models and different price points. Samsung is especially popular in emerging markets, where economic growth is higher but income levels are lower and Apple has a pricing disadvantage versus Samsung.

The company makes good hardware, that’s out of question, but its success would have been almost impossible if it weren’t because of Android. The mobile computing race is not only a matter of hardware and devices; it’s mostly a competition among platforms and ecosystems. Consumers want to make sure they have a deep and trusted ecosystem, and apps developers prioritize those platforms that provide access to big masses of consumers.

Samsung and other manufacturers have overtaken Apple by a wide margin now, and Android has a global market share above 75%. This is great news for Google Inc (NASDAQ:GOOG), not so much on an economic but on a strategic basis. In fact, Google makes more money on iPhones than on Android smartphones, but depending too much on Apple is a fragile position for Google.

The Apple Maps fiasco showed that Apple would really like to cut its ties with Google as much as possible. The only reason why it doesn’t do it is that Google builds amazing applications like Maps, Search, Gmail and YouTube among others which can’t be replaced without seriously hurting the quality  of the service.

One thing is clear though, Apple would remove Google Inc (NASDAQ:GOOG) from the iPhone if it could, and that puts the search engine in a vulnerable place when it comes to the iPhone. That’s why Android was a brilliant strategic move by Google, and Samsung has been its most effective partner in its mission to counterbalance Apple’s strength.

Creating a monster

According to IDC, Samsung is by far the biggest Android partner; the Korean manufacturer shipped nearly 40% of all Android smartphones in the fourth quarter of 2012, followed at a considerable distance by Huawei with a 6.6% of the market.