In various columns over the last year, I have often talked about the dilemma Samsung has as an Android licensee. Since the company was way behind Apple and the iPhone, Samsung took the path of least resistance and went with the Android mobile OS to help it quickly enter the market. Looking back, one can now see how this decision has been a double-edged sword.
On the one hand, Samsung got a serious mobile OS, which has helped it gain a fast following in the smartphone market. On the other hand, it has now become a slave to Google, and ultimately lost control of its own destiny.
I sense that as smartphones are priced lower for emerging markets, Samsung's hardware margins will get squeezed even further and this will have a big impact on its future bottom line.
Although the company will make money in mid-level to high-end smartphones for a while, even this market is flattening out, and I believe Apple has something up its sleeves that will cause Samsung problems in the future.
Yes, Samsung and others could make money by selling a large volume of cheap phones, but the problem with this strategy is that once it makes that sale, the profits end. In emerging markets, the real money will be made in services, localised content, and ads.
Breaking free of Mountain View
A few years back, Samsung ditched its own mobile OS and decided to concentrate on an open mobile OS called Tizen that was heavily backed by Intel. At the time, some of us thought that Samsung was going to seriously consider Tizen as a replacement for Android on its smartphones. However, at MWC this year, Samsung surprised many by putting Tizen on its Gear smartwatches instead.
Samsung said that the key reason for this move was that Android only gave Gear about a day and a half of battery life. With Tizen, it gets up to three.
The good news for vendors that wish to back Android on wearables is that last week Google announced that an SDK for wearables that run on its OS is coming soon. I am sure that Samsung knew this was coming, but decided to shift to Tizen anyway as a strategic move and a bid to have more control over its future.
The shape of operating systems to come
Over the last two years, Samsung has bulked up its software teams and bolstered its R&D budgets significantly. If it wanted to, Samsung could actually move to Tizen on smartphones in the relatively near future.
According to Ars, "the OS runs on 'prototype' hardware that very closely resembles a Galaxy S4. Tizen is a Linux-based OS primarily developed by Samsung, and, the theory goes, Samsung's grand plot is to eventually turn Tizen into a drop-in Android replacement, own the market with an OS of its own making, and never have to deal with Google again.”
"So far, Tizen seems to be a pretty accurate Android clone, but it's shocking how far along it is. On the surface, it seemed just as capable as a TouchWiz Android device. Samsung has done such a good job of replicating the Android interface that there is very little to write about – everything looks and works similarly to the way it does on Android, just without any kind of ecosystem," the site said.
The biggest problem Samsung would have in moving to Tizen is getting software apps written for this OS, although it has some folks working on ways to run Android apps on Tizen. But Samsung has such market reach around the world that it could clearly attract a lot of software apps for Tizen if it really put its cash and willpower behind it.
I would not be surprised to see some dedicated Samsung Developer conferences in key parts of the world to rally the third-party software community around developing apps for Tizen in the next 18 months.
If the company does decide to back Tizen in a broader manner, it would be a gradual move. Samsung can't simply drop Android and shift everybody to a new Tizen platform just like that. However, Samsung is in the smartphone and tablet market for the long run, and it would be in its best interests to eventually drop Android completely and become more like Apple in order to control the hardware, OS, and services – and to stop being a funnel for the Google profit engine.
If I were a betting man, I would put down money that within three to four years, Tizen-based smartphones and tablets will be in at least 70 per cent of Samsung's devices, with only about 30 per cent supporting any legacy Android OS and apps. The future is in apps and services, and Samsung needs to be in control of this if it wants to control its destiny.