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PHONES / INDUSTRY

Samsung Set To Benefit From Google Sale Of Motorola

By Wire Service | Sunday | 02/02/2014

What is the difference between a Samsung Android phone and an Apple iPhone, a lot especially as Samsung manufacturers the bulk of their own components and some for Apple, now the Company is set to benefit from the sale of Google's Motorola Mobile division to Lenovo both with the supply of additional components and the elimination of a threatening competitor.

The New York Times claim that Samsung is set to  scale back development of their own mobile OS a move that could force LG to question their investment in Web OS.

Google's ownership of Motorola was always something of a threat to Samsung, which is the No. 1 phone maker in the world. Samsung phones largely run on Android, Google's mobile operating system. But Samsung has been developing its own mobile operating system, Tizen, partly in case Google put its full weight behind building its own hardware. With Google out of the handset-making business, Samsung can scale back on those efforts and build on its position as the leading seller of Android phones.

Google stands to benefit from Samsung as well. Google would like to get its Internet services running on as many mobile devices as possible. Samsung has reportedly agreed to reduce the modifications it makes to Android so that Google's services will be more prominent and the software will look more like  Google's vision.

The New York Times said that it is unclear what concessions Google made for Samsung in return. But Chetan Sharma, an independent telecom analyst, suspects that in exchange, Google will give Samsung some beneficial treatment, perhaps by more aggressively marketing Samsung phones or by offering Samsung earlier access to service enhancements. Just by collaborating more closely with Samsung, Google would put other Android manufacturers at a disadvantage. That relationship was also bolstered this week, when the two companies agreed to cross-license patents.

"Samsung is just going to get stronger," Mr. Sharma said. "There are not many opportunities available for other manufacturers except to be a counter to Samsung on price, and their margins are going to be really low. It does put other manufacturers in a very tough spot."

The purchase of Motorola has made Lenovo, which began exclusively making Android phones only last year, a formidable competitor for Samsung.

Lenovo began exclusively making Android phones only last year, and already it has become the third-largest smartphone maker in the world. Nevertheless, with a combined 6.4 percent smartphone market share over the fourth quarter, Lenovo and Motorola will still be far behind Samsung, which has 29 percent of the market, and Apple, which has 17 percent, according to Counterpoint Technology Market Research.

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