AMZN didn’t even bother to publish a press release, but in a nutshell, Samsung’s Galaxy smartphones and tablets receive a customized version of Amazon’s Kindle app for Android that is optimized for the devices and offers owners 12 free e-books yearly.
In other words, Kindle for Samsung cuts out all the other devices running Google’s (GOOG) Android operating system.
And while an e-book app certainly seems like small potatoes for a company delving in countrywide shipping and streaming video … it’s not out of the realm of possibility that the Kindle for Samsung could represent something so much more.
Namely, a first step in a SSNLF/AMZN alliance that fights back against Google’s dominance, threatening Android’s dominance and ultimately putting GOOG’s critical mobile ad revenue in jeopardy.
Amazon: The poster case of Android forking, Amazon took the open-source version of Google’s Android operating system and turned it into Fire OS. Unlike stock Android, this version has pretty much all things Google cut out of it — users shop online, download apps and access digital media through Amazon, not Google Play; Google apps are nowhere to be found; and Kindle tablet owners browse the web using Amazon’s Silk web browser — with Microsoft’s (MSFT) Bing as the default search engine.
Samsung: Samsung has become the poster child for Android. Google’s mobile OS might dominate, but Samsung alone accounted for just under one-third of all smartphones sold globally in 2013 and 19.1% of all tablets sold that year. In both tablets and smartphones, the next closest manufacturer offering Android accounts for about 5% of global sales. Samsung is a huge company with many divisions, but is very reliant on its mobile division for profits, with smartphones alone accounting for over two-thirds of its income.
Google: Despite increasing its presence in hardware, GOOG still makes the vast majority of its profits from advertising. With mobile ads becoming increasingly important as smartphones and tablets push out traditional PCs, Google responded by buying Android and making it free for smartphone and tablet manufacturers. Google’s strategy helped Android take a big lead in mobile market share, and with its platform firmly entrenched, GOOG is able to ensure its apps and services are used – driving up that mobile ad revenue.
The Samsung/Google Cold War
Samsung and Google have both benefited from their partnership, but some cracks are starting to develop.
In particular, GOOG is obviously aware of the fact that it might have created a monster in SSNLF. Having Android dominate the mobile market is great, but having one manufacturer — Samsung — responsible for so much of that growth is worrisome. Because if Samsung has brand loyalty and switches to another operating system, it could decimate Android’s market share and bludgeon Google’s mobile ad revenue.
Google has made moves to reduce the threat, including the purchase of Motorola Mobility, but after quickly selling the division to Lenovo (LNVGY), on the surface it appears to have given up on the idea of competing against Samsung’s Galaxy line of flagship smartphones.
However, GOOG has been pushing a secret weapon called Project Ara, a new platform that aims to do to smartphone hardware what Android did to mobile operating systems: completely disrupt it.