It’s often said that Apple (AAPL) and Samsung (SSNLF) are “frenemies.” They compete for top smartphone and tablet honors, spend much of their time trying to sue each other into oblivion, and yet Samsung is one of Apple’s largest component suppliers.
Samsung is also in a tense relationship with Google (GOOG), and if anything, this one’s even more dysfunctional.
While popular devices like the Galaxy S5 smartphone have helped Google’s Android to become the leading mobile operating system, Samsung’s dominance of the Android market has caused friction with Google.
What happens to GOOG stock if the face of Android decides to go its own way and takes a huge chunk of the Android market with it?
The two companies have butted heads over the past year, and the hostilities between GOOG and SSNLF became even more apparent after the Google I/O Conference. According to The Information’s Jessica E. Lessin, several weeks after the conference where Android Wear made its debut, Google CEO Larry Page confronted senior Samsung executives over that company’s focus on smartwatches running Tizen — Samsung’s wearable OS competitor.
From wearables to the smart home, here are 5 battlefields in the growing war between Google and Samsung.
Google vs. Samsung — Wearables
They key battle in the war between GOOG and SSNLF is over Tizen, the operating system Samsung developed in-house for wearables.
Samsung’s first Galaxy Gear smartwatch ran Android, but the Gear 2 and Gear 2 Neo released earlier this year ran Tizen instead. Adding insult to injury, Samsung then offered a free upgrade to Tizen for owners of those original Galaxy Gears.
At Google I/O 2014, Samsung’s Gear Live smartwatch (reviewed here) was featured onstage, but it’s a more-or-less repurposed Gear 2 Neo instead of an effort to release new hardware optimized for Google’s Android Wear.
With smartwatch competition expected to arrive shortly from the Apple and Microsoft (MSFT) camps, Google wants Android Wear to be a solid front that repeats Android’s dominance in smartphones and tablets.
Having Samsung — the current smartwatch leader and the top producer of Android mobile devices — snub Android Wear in favor of its own competing operating system is going to hurt Google’s efforts.
With Tizen using its own apps and not making using of Google Now like Android Wear does, GOOG stock could feel the impact if Samsung builds a smartwatch lead without contributing to Google’s search ad revenue.
Google vs. Samsung — Smartphones
Android dominates the world smartphone market, but a huge chunk of sales belong to Samsung. Even though SSNLF took a hit last quarter as cheaper smartphones gained ground, IDC says it still accounted for more than 25% of all smartphones sold worldwide.
The closest Android smartphone vendor — China’s Huawei — accounted for less than 7%.
Google’s Project Ara is a defensive move. SSNLF is nearly as dependent on smartphone profits as GOOG stock is on ad revenue. Project Ara would offer consumers a dirt-cheap smartphone skeleton that can be customized and upgraded at will using modules that can be swapped out.
Naturally, Project Ara smartphones run Android.
If it takes off, the smartphone upgrade cycle is dead, killing profits for companies like Samsung that rely on consumers to buy a new phone every two years. Project Ara would reduce Samsung’s mobile market share while preserving or even boosting Android’s dominance.
In response, Samsung has been showing off a smartphone that ditches Android altogether, running Tizen instead.
Google vs. Samsung — The Smart Home
The smart home is another battlefield where Samsung And Google are fighting.
Samsung has been producing Internet-connected smart appliances like refrigerators and washing machines for several years. It announced its Samsung Smart Home platform at CES 2014. And now Samsung is dealing to buy Smart Things, a home automation company. According to TechCrunch’s Alexia Tsotsis the deal will be in the range of $200 million.
Google didn’t get far with its Android@Home initiative, but it’s made a big play for the smart home in 2014 with the $3.2 billion acquisition of Nest Labs — a smart thermostat leader — followed June’s acquisition of Wi-Fi security camera company Dropcam.
Google vs. Samsung — The Living Room
Google has tried a few times to crack the living room, but its Google TV initiative failed to take off. However, the introduction of 2013’s hit Chromecast has given Google new life. Android TV is now its focus, and Google is looking to take on Apple TV and Amazon’s (AMZN) Fire TV with its own set-top box.
Android Police’s Cody Toombs says Android TV boxes are already in developer hands.
Samsung has long been a market-leader in Smart TVs, which provide apps and Wi-Fi connectivity without the need for a set-top box. While it added Google TV functionality in some sets, Samsung’s primary strategy has been to use its own Linux-based operating system with its own app store. With Google pushing the new Android TV standard, SSNLF isn’t sitting still.
In July, Samsung released a beta version of its new Smart TV platform, and it’s based on Tizen — the same mobile operating system Google is worried about in the wearable and smartphone spaces.
Google vs. Samsung — Health
Google Health was an early attempt at collecting and storing consumer health data, one doomed by the lack of wearable devices available at the time of its 2008 debut.
At Google I/O 2014, GOOG introduced Google Fit, a new platform for collecting data from wearable fitness devices and health monitors.
Samsung, in the meantime, has invested heavily in its S Health for its Galaxy devices — a fitness and health-tracking app that will end up being in direct competition with Google Fit on Samsung’s Android-powered smartphones.
SSNLF also released its own fitness band earlier this year, the Gear Fit (reviewed here) — a wearable that’s compatible only with Samsung mobile devices.
Google vs. Samsung: The Future?
The relationship between Google and Samsung started out simply enough: Google provided an operating system at no charge that let Samsung’s mobile devices compete against Apple. This let SSNLF become very profitable based on smartphone sales, while GOOG stock enjoyed the boost from mobile ad revenue generated by all those Android smartphones and tablets.
Samsung becoming so dominant among Android hardware manufacturers has caused tension between the two partners, and the ambitions of both companies have grown. Expansion and defensive moves have resulted in outright competition in many areas.
Still, they do manage to cooperate at times. A good example is Google’s Chromebook initiative, which owes much of its success to Samsung releasing compelling Chromebooks like the popular Series 3.
Whether the current conflict escalates depends largely on how Samsung’s Tizen operating system performs — if consumers shun Tizen devices or developers fail to get behind the platform, then Samsung may have to fall back into line.
GOOG or SSNLF may blink, too, deciding that any disadvantages of working closely together instead of fighting for dominance in a particular market are outweighed by possible gains by their mutual adversary — Apple.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.