Is Samsung too dependent on Android?

For example it last year introduced its own Android software store, Samsung Apps, which has about 40,000 apps – a handful compared to Apple’s 500,000 for the iPhone and 450,000 for Android. And last month it announced its own mobile advertising service, AdHub Market, apparently competing with Google’s own ad distribution network – its main source of revenue.

Is Samsung too dependent on Android?

And while all but a fraction of Samsung’s smartphones are currently Android devices, the South Korean group has said it is committed to creating devices for different operating systems – what it calls a multi-platform strategy. Analysts said this has so far been half-hearted.

They’ve tried to beat the drum for bada, but it hasn’t had much traction

It has an operating system called bada, for example, which was on fewer than 3% of the world’s smartphones last year, according to Canalys, putting it ahead of Microsoft’s Windows Phone. But that’s nothing compared to Android, which was on nearly half of all smartphones shipped. “They’ve tried to beat the drum for bada, but it hasn’t had much traction,” said Jake Saunders, a Singapore-based analyst for ABI Research.

Alternatives to bada

Samsung says it plans to introduce more models, but has also said it may roll bada into another operating system called Tizen, and is in any case building an ecosystem that would improve compatibility between the two systems. It was keen to stress, however, that while Android was an important part of its strategy, phones running Windows and bada operating systems were equally important. Given that bada and Windows phones account for less than 5% of Samsung’s total phone shipments, it suggests Samsung will give greater weight to Windows and bada phones in the months ahead.

But these are small steps given the scale of Samsung’s dependence on Android. Samsung, said Ovum’s Cripps, is keenly aware of the need to shape a broader strategy. “Especially in the last year there’s been quite a lot of thought internally about which way they go with this.”

If it wants to avoid merely competing at the bottom end of the market with ZTE and Huawei, analysts agreed it must develop an ecosystem that embraces software, content, other devices and all the players that help make that happen. This would inevitably pit it against Apple, Amazon, Google and Microsoft. All have different business models, said Cripps, but the same goal: to “own every element of the consumer’s online and mobile experience.”

In some ways, Samsung is well positioned for this. “Samsung is not just a phone maker like HTC so it does have the potential to create platforms which deliver content and web services to TVs, PCs, phones and media players, and connect them,” said Caroline Gabriel, research director at Rethink Technology Research.

This is Samsung’s competitive advantage, said Gabriel, as the world shifts more to web-based technologies like HTML5, which reduce the relevance of individual operating systems and platforms like Apple’s iOS and Android. Instead, applications will be more like web pages, which can run on any device.

Samsung can draw on its extensive supply chain, manufacturing capability and research and development facilities to make this happen, Gabriel noted, but its challenge is to overcome silo-like systems within the company and to learn how to develop relationships with the outside world.

“Samsung has no track record of building a developer ecosystem and even in the web that’s going to be a challenge,” she said. “It may have thought Google would be a solution, but Google is too controlling.”

Deeper changes

It also requires deeper changes, said Ovum’s Cripps – not only to be the first Japanese or Korean company to break into a world dominated by U.S. players, but to succeed where once- dominant players like Nokia, RIM and Microsoft have stumbled. “I can well understand any doubts they may have internally about how they should push ahead with this,” he said. “It is genuinely very, very difficult.”

Samsung has made some tentative steps, for example into wedding its Smart TV business into partnerships with content providers. And developers like Singapore-based Jon Petersen say the company has put out feelers to outsiders to help work on software applications – in apparent recognition of its own weaknesses. Such weaknesses were visible even with the app it published ahead of Thursday’s S3 launch: almost a third of reviewers gave it the lowest rating, complaining it didn’t work properly.

For now, no one denies Samsung’s pre-eminence. “The zeitgeist right now is definitely towards high-end Android devices of which Samsung is clearly the leader so I don’t think there’s any instant danger,” said Cripps. “It’s more a case of what Samsung wants to be in five years’ time and planning towards that.”

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