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Android: The Double Sided Sword Of The Mobile Industry?

Eric McBride
22

Yes, the Galaxy S2, Galaxy Nexus S3, Note, and Note 2 are killing it. Yes, Google’s new Nexus lineup could change the game for Google and Android. Yes Android is doing great, and yes it has established itself as the most used mobile OS in the world. That’s great news, and both companies should be thrilled and damn proud of what they’ve accomplished. But what about the rest of the many OEMs backing Android? Is Android honestly worth pursuing anymore for companies like HTC, Sony, Panasonic, Asus, and Acer (and the many other smaller tier OEMs)? Has Android become the double sided sword of the mobile industry?

One OEM's failure is another OEM's gold

I’ve always worried that one company would eventually come along and in one way or another damn near monopolize Android. Well that company has come, and to put it frankly, they are leaving the competition in the dust. We all know who I’m talking about: Samsung. Now don’t get me wrong...Samsung has worked HARD to make their devices so successful, and to look at them badly for that would simply be unfair. They make great products with top notch hardware, they market them aggressively, they spend tons of money, and they get a nice return on it. I don’t call that monopolization...I call that doing business. The problem is that Sammy is doing business so well, that others don’t seem to have a chance to get their beaks wet

Other Android OEMs that also make GREAT devices are simply not having luck with Andy, and it’s slowly but surely becoming more and more of a problem. HTC is financially struggling more and more every quarter of every year, and are beginning to set their sights more and more on alternative ways of competing (like Windows 8). Just TODAY, it was reported that Panasonic plans to completely pull its entire smartphone sector out of Europe (WOW) just 1 year after re-entering the market with their flagship Eluga device. Sony’s numbers have also taken massive hits in mobile (across the board actually), LG is failing to move big numbers with Android, and Motorola, although now the property of Google, have yet to deliver a hit flagship device that’s selling big with consumers. Acer isn't fairing any better, and although Asus is cranking out quality tablets (Nexus 7, Prime, Infinity, ect) at multiple price points, we are yet to see a true "hit" in terms of sales.

Samsung on the other hand, continues to break records in sales and profits, and is slowly gaining Apple-ish cult-like status in the mobile world. Some Android OEMs have openly admitted that attempting to compete with Samsung and Apple just isn’t paying off. Is this a problem for consumers? Is it a problem for Android in general?

Android up for sale? I don't think so

I read this article a few days ago (I can’t remember where I read it) where the author said that Samsung will probably just buy Android from Google. Not to my surprise, he got flamed..HARD..by damn near all of the many commenters reading his article. His arguments weren’t thought out, as he didn’t take many factors into consideration (Google buys Moto for 12.5 BILLION for patent protection and hardware, and then sells Android? Riiiiight). But the article did implant an "Inception style"  thought in my mind: What if Samsung remains the only company that continues to make a substantial profit from Android?

There’s a reason that Google chose Samsung to make the Nexus 10, and it’s not because they make the best tablets. In my opinion, a Nexus 10 with an Asus premium design and feel (like with the Prime and Infinity) would have looked and felt better in the hands. Google went with Samsung for one reason: Because Samsung is THE Android cash cow. If anyone can make an Android device damn near as popular as an iPhone, it’s Sammy. Now before you say “ah whatever Eric..if that’s the truth, why did Google go with Asus for the Nexus 7?”, hear me out for a sec...

Sharing the Nexus love

The Nexus 7 and the Nexus 10 are two completely different ball games folks. What makes the Nexus 7 attractive for consumers is it’s price point (along with the hardware you get for that price ), and takes a direct stab at the Amazon Kindle, which is also at an eye catching price point. The Nexus 10 however, is clearly meant as Google’s first real attempt at an iPad competitor, so why not go with the company that’s already giving the iPhone a run for it’s money (Samsung) in promoting it?

So how does the Nexus 4 from LG fit into this equation? Why not another Samsung Nexus phone? After all, Samsung has released consecutive Nexus devices for 3 years in a row now (Nexus S, Galaxy Nexus, Nexus 10). To put it simply, it doesn’t matter AT ALL to Samsung that LG made the first Nexus phone this year, and here’s why.

3 new Nexus devices from 3 different OEMs...ain't nothin wrong with that

The party crasher

The Galaxy S3 is Samsung’s current flagship, mobile cash cow, and face of the company in terms of mobile. The Note 2 will most likely help to expand that. As good of a device as the Galaxy Nexus is, it didn’t move massive numbers of units (it wasn't marketed too) like Sammy's flagship products have (not bad numbers either). Fact of the matter is this: Samsung can easily keep it’s focus on it’s current flagships without the need of a Nexus phone, and it won't hurt them one bit.

Another reason is because Sammy is probably more than happy to be the first company to bring out Google’s first real iPad competitor. When you think about it, there hasn’t been a Nexus party in 3 years that Samsung wasn’t in some way invited too, and with the numbers they’re pushing, I’d be willing to bet money that they won’t get scratched from the guest list anytime soon.

A third reason is that Samsung could STILL release a Nexus phone this year or early next year, since it's now obvious that multiple companies are getting in on the Nexus action now. Samsung likes having the best when it comes to hardware, and maybe they are simply waiting a bit to see what the competition spits out before releasing their Nexus device. Who knows? But whatever the reason, the bottom line is that even though Samsung hasn’t released a Nexus phone this year (yet), that they still pushed out a Nexus device. Special treatment for Android’s biggest player? You be the judge.

The Nexus gift, or more of a curse?

But wait..maybe the new Nexus strategy could help ALL Android OEM’s? What if HTC, Sony, and Motorola Nexus devices ALL sold well? That would be great right? Of course it would, but for who? Do Nexus devices actually promote the OEM, or Google (or both)? The way I see it, if the only hit selling device you have is a Nexus device, isn’t that better than having no hit selling device at all? Assuming that OEMs are still making a decent profit for each Nexus device sold, it could actually be a win win situation for Google and its OEM partners.

That being said, the lower priced (but very powerful) Nexus devices could turn consumers away from devices with skins (that mostly cost much more and run the same hardware), and could force OEMs to get a lot more competitive on the pricing of their other products. It’s almost like Google is subtly promoting stock Android more through OEMs, which is a strategy that could help them, but could also very much hurt them at the same time. All I do know is that at this point, LG could very badly use a hit selling Android device, and whether or not it has Nexus on the back of it or not is probably irrelevant. Who knows..maybe a Nexus device could help build more consumer confidence back with struggling brands?

Responsiblity comes with the Nexus brand, so don't f**k it up LG

Conclusion

It will be very interesting over the course of the next few months to see whether the new Nexus strategy will pay off for Google and its partners, and I’m very curious to see the sales figures for Nexus devices 6 months from now. They will be very hard to ignore for consumers due to their price points and powerful specs, but they will naturally need to be marketed not only by their respective OEMs, but by Google directly. So do I think other struggling OEMs should give up on Android? No I don’t. I think they need to play along with the new strategy and see where it could take them. Do I think they need to be careful? Oh yes. The last thing Android needs is a monopolized market and less choices for consumers.

Openness and choice is what makes Android special (I wish I could say the same for expandable memory), and I hope Android never loses that. But if the other OEMs want to also have hits on their hands, they need to buckle down and do exactly what Samsung has done to achieve success:

Work harder.

...(and yeah..that also means spending more).

Picture credits: (top photo) ©Stock.xchng (edited by myself)

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Comments

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    Christopher Silva Nov 1, 2012 Link

    This is a great article Eric. Honestly, one of the best I've read about the current Android market place. Will everyone agree, no, we never do. But this article is full of smart insight into the market and the strategies surrounding it.

    It would be sad to see HTC go, They still produce great devices. Sony just seems to be late to dinner- all the time, sad really.

    Thanks again for the article.

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  • Eric McBride Nov 1, 2012 Link

    Thank you very much Chris! I'm very glad you enjoyed it! :-D

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  • Gio A. Nov 1, 2012 Link

    Ads make google, but google can't make ads. what I'm trying to say with this is that Google makes a profit on placing ads in almost all they're services, but still they don't use some of that ad space to promote they're own products and make them successful. Google is, if I remember correctly, the second most visited site on the Internet and if they would to place a ad for the nexus devices not on the search page but on the results page they probably would reach a wide range of people. I use Google every day and I use it a lot and I'm sure that a lot of other people also do. So a wrightly placed ad would bring a lot of attention.

    But hey this is just my two cents.

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  • ljhaye Nov 1, 2012 Link

    Great article with many excellent points!!! The sad truth is that Samsung like Apple controls their supply chain and are able to wring efficiencies out of their manufacturing process which helps lower cost increasing their margins. None of the other OEM's have access to that supply chain because of the costs and very few OEM's can build their entire phone in house with any type of meaningful volume. Samsung however can produce and manufacture all of its components in house without the need for other suppliers. The other twist is that most OEM's can’t afford Samsung components for their hardware, Apple can and has always used Samsung as one of their main component suppliers, but they are sitting on over 120 billion in cash. I do like Samsung but, the economic realities is that the other OEM's aren’t selling enough volume to generate discounts on components and each year they fall further and further behind financially as the cost for R&D and marketing increase. Not to mention that most component suppliers are tied to Apple (or seeking to be) with exclusive contracts guaranteeing them huge volume. Samsung is the big number two regarding components that they don't manufacture in house.

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  • Michael Heller Nov 1, 2012 Link

    2 things: First, your point about it not being clear if OEMs even benefit from a Nexus device completely contradicts your point about Google choosing Samsung for the Nexus 10. Remember, it's called the Google Nexus 10, not the Samsung Nexus 10.

    Second, and this is admittedly a minor OCD type annoyance, samurai swords are single edged swords not double, so while the headline image looks cool, it doesn't help the title.

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  • Eric McBride Nov 1, 2012 Link

    Hi Michael, and thanks for reading!

    I should have made that clearer, and I apologize for that. So far, having a Nexus device has benefited no one in terms of sales, but with Google's first attempt to go directly at the iPad, they naturally have to do this with the OEM that has the most foothold in the market. That naturally is Samsung. Whether Samsung markets the device enough to make it a hit is yet to be seen, but considering their success, Google will have the most chances at a successful Nexus 10 by launching it with the OEM that is essentially the face of Android. All Google needs to do is market it directly. The combination of that + Samsung's reputation could be exactly what the Nexus 10 needs to take off.

    And yeah, I know that it's not a double sword..we are having some legality issues over pictures recently, so it "looking cool" was exactly what I was after :)

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  • Michael Heller Nov 1, 2012 Link

    I understand the logic you're trying to convey, I'm just not sure that it holds true, because as I said, it is called the Google Nexus 10, not the Samsung Nexus 10. On Google's dedicated information page for the tablet, it says "Samsung" exactly once, and the word Samsung doesn't appear anywhere in the Google Play Store listing for the Nexus 10.

    Your logic as to why Google chose Samsung doesn't really hold if Google isn't using Samsung's name and popularity to push the device. Your logic certainly works with the Samsung Galaxy Nexus from last year, but not with the Nexus 10.

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  • Eric McBride Nov 1, 2012 Link

    Good points Michael, but I have found that even most of my iPhone wielding friends even know that the Galaxy Nexus was made by Samsung. I don't think Google will so much use Samsung's popularity to market the Nexus 10. Rather, the fact that Google is directly pushing it, and that Samsung built it is the best possible combo choice in the eyes of a consumer. It's simply the best of both worlds.

    First they know its a Google product, then when/if they see that the partner company for it also just happens to be the same company behind the very successful Galaxy S3, it will could help to create a sense of how serious Google is taking the device.

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  • Michael Heller Nov 1, 2012 Link

    As I said, your iPhone friends should very well know that the Galaxy Nexus is a Samsung device, because it is labeled everywhere as the Samsung Galaxy Nexus.

    The Nexus 10 doesn't have that. Google would certainly get more people to look closely at the device in stores if it were labeled the Samsung Nexus 10, but it won't be, and the only way people will know it's a Samsung device is by picking it up and looking at the back of the device (and how many people really do that?) And, the point still stands that it doesn't say Samsung anywhere on the Google Play Store page.

    Google is definitely taking the new Nexus devices quite seriously, but I just cant see much evidence that they are trying to leverage the popularity and ubiquity of Samsung in the Android world with the Nexus 10 release.

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  • Eric McBride Nov 1, 2012 Link

    I definetely see your point. The lack of Samsung's branding in this case could make or break the whole deal. It could make it if people believe that Google is more capable of creating a successful tablet. It could break it if they feel that Samsung is better suited for the job.

    I mean surely Samsung/OEMs must have something to gain by wielding a Nexus device. Then again, it could just be the hope of sales.

    Let's see how it plays out!

    Thanks again for reading. I love these kind of discussions!

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  • Michael Heller Nov 1, 2012 Link

    My theory has been that the benefit to OEMs to be part of the Nexus program is to get early access to Android software, so they can push updates faster and release devices with the newest version of Android faster.

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  • Eric McBride Nov 1, 2012 Link

    Yeah, I have also considered that. But do you think the early software access has accomplished that thus far?

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  • Michael Heller Nov 1, 2012 Link

    I covered that in one of my own articles, if you don't mind me linking rather than rewriting: http://www.phonearena.com/news/The-potential-ripple-effect-of-Googles-new-Nexus-strategy_id35318

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  • Eric McBride Nov 1, 2012 Link

    Thank you for sharing this! I knew I recognized your name from somewhere! Great having you here! :)

    I will read your article and reply to you soon!

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  • Eric McBride Nov 1, 2012 Link

    @Michael - Just read your article. Very nicely written. What you said here:

    "Google isn't an authoritarian company that forces companies to play by the rules they set".

    That's a very good point. The whole software update advantage that you covered is something I should have touched on as well.

    Good stuff!

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  • Dogukan Nov 1, 2012 Link

    I think Google asked Samsung to do Nexus 10 because Google knows that a chipset capable of displaying 2500x1600 resolution, fast enough to beacome iPad killer is none other than Samsung's Exynos 5. They were going for an iPad killer and Samsung was the one who could do it. I think its simple as that.

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  • Eric McBride Nov 5, 2012 Link

    @Michael - FYI..under all the pictures I have seen, the Samsung branding IS on the back of the Nexus 10. It's just very small and written under the Nexus branding. In this case, I'm sure that's more than enough for Samsung, and more than enough for consumers to recognize.

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  • Scott Nov 7, 2012 Link

    Perhaps I can shed some light on this. I run DBACases which is a cellphone case maker and we make Just like Glass screen protectors.

    I also own a Galaxy Nexus - a great phone that was never marketed properly at all.

    You need to look to the carriers for many of these problems. For example I am with Verizon - love the service and coverage however they will do anything to make a buck including pushing a phone brand that may not be the best.

    I also owned the Bionic before the Galaxy Nexus through them.

    I noticed that they bring people who are not coming in to the store for an iPhone right to the Motorola RAZR line which is central in the store.

    Two weeks after the Bionic came out it went to the corner of the store (Corporate Store). The Galaxy Nexus took a week to join it in the corner.

    They are happy to sign new people up using these phones but they make far more money selling the RAZR line.

    This means little or no support for the Galaxy Nexus and the Bionic.

    They also damage their customer base by releasing a new RAZR every other month. For people like me who make cases why would I make a case for a phone with a shelf life of 2 months?

    Samsung does well because they don't release a million kinds of models and because they take their time to make great phones. They have learned that the Apple model of a major phone a year works. They made the S3 to be their major handset and the Note II is a niche product.

    So until Motorola stops the insanity of releasing slight upgrades to the RAZR line every other month they won't do well. HTC releases a ton of models with the "if we throw enough at the wall something will stock" model. LG isn't consistent.

    So Samsung gets my attention. So far we make our cases for the S3, the iPhone 5 is coming and then the Note II. We see these are long term selling phones with support.

    What should Google do? They need to completely take over the update process. There should be some way to divide the carriers overlays with the base update of the operating system. Carriers cannot be trusted to get an upgrade out because it's not in their financial best interest.

    If Google pushed out a "base" update to every Android phone that would solve many problems. They have the power and the money to do this. Then my Galaxy Nexus wouldn't have waited 5 months for an update that should have been a month.

    Scott Weiner
    CEO
    DBA Cases, Inc.

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  • CJ Brown Nov 8, 2012 Link

    @Eric ,


    I always enjoy your articles as they leave me not only thinking carefully about the future of Android as an OS ... but also what consumer electronic products I will be purchasing in the future. I <3 HTC, however they're not trying hard enough in the "no contract" market (& really need to offer up a 4.3" screen 4G lte HTC ONE without Beats Audio - but with an 8 megapixel camera) ....


    Not only have I found a Samsung Galaxy S II "no contract" (Boost Mobile), I also foujnd a Samsung Galaxy S III "no contract" (MetroPCS) & both are selling stronger then the revamp'd HTC EVO 4G lte being sold (Virgin Mobile, Boost Mobile) - even though the HTC is selling well due to its low price (& that's what HTC is going to have to use if it wants to keep itself from going belly up) ....


    At the same time, Google needs to work with every single Manufacturer it has licensed Android OS to (or let Companies like Nokia, and Sony, just go to Windows if they're not going to give either enough assistance in delivering quality products). I won't be surprised if every single Manufacturer I mentioned (with the exception of Motorola) comes out with a Windows Smart Phone in the event they lose their Android flagship ...


    http://www.metropcs.com/metro/detail/Samsung+Galaxy+S%C2%AE+III/SCHR530RWBM


    no contract is the future / if an article needs an "update" due to a change in what's predicted? I don't mind -

    C J

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  • PJK2011 Nov 8, 2012 Link

    I really don't care for Samsung corporate because of poor product support and the way they mess up Android, but I have bought 2 Samsung phones because they give more hardware for the money, and their market share means 3rd party ROM support and low second hand prices.

    I'd be more inclined to consider another brand if there was more awareness of what other choices are out there in terms of good Android implementations and good hardware value at the price point.

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  • Michael Robinson Nov 8, 2012 Link

    The bottom line is that Samsung listens! Mind you I did not say Google. Samsung has taken what Google puts out in software but ignores the shift that Google is trying to make in hardware across the board. People want removable batteries and expandable storage. It WAS a MAJOR selling point for Android devices. Now Google thinks people are too stupid to use them correctly? That is a slap in the face even if it has a thread of truth. Samsung is smart enough to realize that if they tick off all the boxes (e.g. top of line hardware, expandable storage, replaceable battery, mostly unlocked bootloaders and friendly to the development community) and wraps it all up in an okay package, people will flock to it like thirsty people after water. Why they are the only OEM to figure this out is beyond me. I've heard all the excuses, i.e. the cloud, put a maxi battery in it, design choices re: no removable battery, carrier pressure to lock the phones down etc. But they are all excuses and represent compromise! If I'm putting my hard earned cash down and locking into a subscription for two years, I don't want to hear compromise. I want what I want in my phone.

    Not to be too long winded, I love choice. When Google starts to dictate that they no longer want external SD support, or push phones without removable batteries (AND poor battery life) as well as all the OEMs locking down the phones so tightly it takes months to crack, well that leaves one choice; that is Samsung.

    P.S. isn't it at least somewhat ironic that HTC started it's downward slide after sealing in the battery and locking down it's bootloaders? There has got to be some kind of parallel. I know at least ONE customer they lost.

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