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    limh5's Avatar

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    Smile Samsung’s Biggest Threat is Google (Not Apple)

    Would you agree that Samsung's biggest threat is Google and not Apple?



    Samsung’s Biggest Threat is Google (Not Apple)

    With Apple and Samsung facing off in multiple court cases around the world, and Samsung’s move earlier this month to raise the price of mobile chips it sells to Apple by 20%, it seems logical to think that Samsung’s biggest threat is Apple.

    However, the wildy-popular Nexus 4, with its Nexus branding and hefty Google subsidy, shows that Samsung’s biggest threat is actually Google and its Motorola subsidiary.

    Samsung is More Than Capable of Fighting Apple

    First of all, as Samsung’s legal battles with Apple escalated in the past year, Samsung’s smartphone market share and unit shipments have increased faster than Apple’s. Canalys research released on November 8 shows that Samsung’s market-share and shipments increased by 107% YOY (year-over-year) in Q3 2012, outpacing Apple’s 57% YOY growth. Thus, despite constant attempts by Apple to ban the sale of Samsung products, Samsung is showing that it actually has the upper hand.

    Google + Motorola Could Mean Only Motorola Gets Nexus Devices

    Google has stated that when it acquired Motorola in mid-May, it inherited Motorola’s 12-18 months of product pipeline. Thus, we have not seen a Google-designed Motorola device so far, and devices like the DROID RAZR HD and RAZR MAXX HD were announced 4 months after the acquisition.

    However, once the 12-18 months of inherited product pipeline is depleted, we can expect a wave of Google products from Motorola. This is expected between May and December of 2013. What this means is that Motorola will be launching Nexus products, because that is Google’s brand in mobile.

    In fact, Google will likely favour its subsidiary by allowing only Motorola to launch Nexus devices. While Google currently relies on OEMs (such as LG and Asus) to produce Android hardware, Android OEMs become expendable as soon as Google can produce its own Android smartphones using Motorola. In fact, Google has a strong incentive to favour Motorola in the future. This incentive takes the form of higher revenues and potential earnings for Google itself (and its shareholders).

    Google will likely not only give Motorola exclusive use of its Nexus branding, but also subsidize the cost of Motorola Nexus smartphones the way the Nexus 4 is being subsidized. It is estimated that Google is subsidizing $384 for every Nexus 4 LG produces. Once Motorola is able to produce Nexus devices, Google will likely have no desire to send this sizable payment to LG. Instead, it would rather subsidize Motorola.

    Google Wants A Chunk of Samsung’s Android Profits

    As the chart above indicates, Samsung now earns more operating income from Android than Google does. It is quite incredible that an Android OEM earns more profit from Android than Android’s owner. This is a fact that Sergey Brin will likely attempt to change in the future. Thus, we can expect Google to try to take a bigger proportion of Android profits, which would leave less for Samsung...

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    thenameisnigel's Avatar

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    Default Re: Samsung’s Biggest Threat is Google (Not Apple)

    Quote Originally Posted by limh5 View Post
    Would you agree that Samsung's biggest threat is Google and not Apple?



    Samsung’s Biggest Threat is Google (Not Apple)

    With Apple and Samsung facing off in multiple court cases around the world, and Samsung’s move earlier this month to raise the price of mobile chips it sells to Apple by 20%, it seems logical to think that Samsung’s biggest threat is Apple.

    However, the wildy-popular Nexus 4, with its Nexus branding and hefty Google subsidy, shows that Samsung’s biggest threat is actually Google and its Motorola subsidiary.

    Samsung is More Than Capable of Fighting Apple

    First of all, as Samsung’s legal battles with Apple escalated in the past year, Samsung’s smartphone market share and unit shipments have increased faster than Apple’s. Canalys research released on November 8 shows that Samsung’s market-share and shipments increased by 107% YOY (year-over-year) in Q3 2012, outpacing Apple’s 57% YOY growth. Thus, despite constant attempts by Apple to ban the sale of Samsung products, Samsung is showing that it actually has the upper hand.

    Google + Motorola Could Mean Only Motorola Gets Nexus Devices

    Google has stated that when it acquired Motorola in mid-May, it inherited Motorola’s 12-18 months of product pipeline. Thus, we have not seen a Google-designed Motorola device so far, and devices like the DROID RAZR HD and RAZR MAXX HD were announced 4 months after the acquisition.

    However, once the 12-18 months of inherited product pipeline is depleted, we can expect a wave of Google products from Motorola. This is expected between May and December of 2013. What this means is that Motorola will be launching Nexus products, because that is Google’s brand in mobile.

    In fact, Google will likely favour its subsidiary by allowing only Motorola to launch Nexus devices. While Google currently relies on OEMs (such as LG and Asus) to produce Android hardware, Android OEMs become expendable as soon as Google can produce its own Android smartphones using Motorola. In fact, Google has a strong incentive to favour Motorola in the future. This incentive takes the form of higher revenues and potential earnings for Google itself (and its shareholders).

    Google will likely not only give Motorola exclusive use of its Nexus branding, but also subsidize the cost of Motorola Nexus smartphones the way the Nexus 4 is being subsidized. It is estimated that Google is subsidizing $384 for every Nexus 4 LG produces. Once Motorola is able to produce Nexus devices, Google will likely have no desire to send this sizable payment to LG. Instead, it would rather subsidize Motorola.

    Google Wants A Chunk of Samsung’s Android Profits

    As the chart above indicates, Samsung now earns more operating income from Android than Google does. It is quite incredible that an Android OEM earns more profit from Android than Android’s owner. This is a fact that Sergey Brin will likely attempt to change in the future. Thus, we can expect Google to try to take a bigger proportion of Android profits, which would leave less for Samsung...

    That's not true as it's open-sourced, and they can't just lock up their sources. As long as it's opensourced, there will always be more than one manufacturer and I doubt that FTC would allow Google to give priority to Motorola Mobility since that would create a monopoly to the Android brand, and there was some hesitation on the FTC & the FCC on allowing the Google - Motorola Mobility deal to go through, just for this reason. Yes, Android was made for competition. It's not iOS, nor Windows Phone.


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  3. Thread Author  Thread Author    #3  
    limh5's Avatar

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    Default Re: Samsung’s Biggest Threat is Google (Not Apple)

    Quote Originally Posted by thenameisnigel View Post
    That's not true as it's open-sourced, and they can't just lock up their sources. As long as it's opensourced, there will always be more than one manufacturer and I doubt that FTC would allow Google to give priority to Motorola Mobility since that would create a monopoly to the Android brand, and there was some hesitation on the FTC & the FCC on allowing the Google - Motorola Mobility deal to go through, just for this reason. Yes, Android was made for competition. It's not iOS, nor Windows Phone.
    Android is open-sourced, but Google decides who gets to use the Nexus branding. What the article says is Google will probably only let Motorola use Nexus from now on. Asus and others don't "embody" what Nexus stands for, which is a pure Google experience (software and hardware). It's the same thing with Microsoft Surface - only Microsoft produces it.

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