Samsung has also been increasing its participation in Android tablets over the last quarters, IDC estimates that Samsung’s share in Android tablets jumped to 27.9% in the fourth quarter of last year versus 15.6% a year before.
This means that Samsung could become a problem for Google if it continues to gain market share and intends to renegotiate their agreement, according to The Wall Street Journal:
Several people familiar with the relationship between the companies said Google fears that Samsung will demand a greater share of the online-advertising revenue that Google generates from its Web-search engine.
That’s probably the biggest reason why Google bought Motorola Mobility: in order to develop its own smartphones integrating both hardware and software, mostly as insurance in case the relationship with Samsung turns for the worse. At the same time, the company is fostering its relationship with other hardware producers:
Google is meeting with other companies in hopes that their Android devices can keep Samsung’s leverage in check by providing legitimate competition, the people said. The Internet-search company is hoping new Android devices from manufacturers such as HTC and Hewlett-Packard can challenge Samsung, they said.
Not only is Google feeling nervous about this relationship, Samsung plans to release a handful of phones running the Tizen operating system in some Eastern countries during 2013. The only reason why Samsung could chose to do something like that would be to spread its bets and reduce its dependency on Android. Demand for Tizen smartphones is not precisely booming, especially not in comparison to customer’s appetite for Android devices.
Poker games
Does Google really want to get deeply involved in the hardware business and hurt its relationship with Samsung?
Hardly, hardware is a tough business with lackluster profit margins and many difficulties when it comes to areas like logistics and customer service in which Google doesn’t have much experience. It doesn’t make much sense to risk a very successful relationship with Samsung in exchange for an uncertain venture into hardware.
The online search leader would certainly welcome a bigger participation by other partners in order to reduce its vulnerability versus Samsung, and owning Motorola can be reassuring in terms of guaranteeing that the company can build its own hardware if necessary.
Google wants to keep its dependency on Samsung under control, but it most likely wants to continue benefiting from its productive relationship with the Korean company. The same goes for Samsung and its Tizen smartphones; it looks more like a warning sign towards Google than a convenient business venture on its own merits.
Bottom line
I would say both Google and Samsung are quite happy with things as they are, and they are just trying to make sure that the other partner doesn’t push too hard if it gains more leverage in the relationship. Even if they try to keep their mutual dependency at bay, this alliance is just too convenient to be jeopardized by an aggressive move by any of the companies. This is a poker game, and they are both bluffing.
The article Google and Samsung: Just Bluffing originally appeared on Fool.com.
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