Forks in the Road Ahead?

Two interesting pieces in the past 24 hours that, almost in passing, look at a growing conundrum for Google: how to cope with the fact that Android is largely a profit center for Samsung and nobody else.

Horace Dediu at Asymco (From bad to worse and from good to great) looks mainly at how the mobile world’s value is mostly going to Apple. Samsung is the only other one making any money out of the whole thing:

In absolute terms the iPhone franchise created $244 billion in value while Samsung created $83 billion. The others destroyed $37 billion.

Elsewhere Horace has looked at Android economics (The Android Income Statement among others) and concludes that “Google’s benefit from the platform is modest. He concludes:

In contrast, Samsung, and Samsung alone, is benefitting greatly. It could even be said that today Samsung is the only Android profit engine.

This seems to be the case. Which prompts several questions, some of them addressed in the comments. Is Samsung likely to continue merely taking another person’s operating system, free though it is, and adding a skin or two? How does Samsung feel about sharing a brand — Nexus — with competitors like Asus?

Jean-Louis Gassée in his weekly column for the Monday Note takes a look at this (Business Model Dances). Google, he argues, have not necessarily followed Microsoft by extending vertically with the Nexus 7, but he does believe that “the gentle folks at Samsung are not going to take this with a smile and a quick genuflection.”

If they’re not cowed by Apple, they certainly aren’t going to let Google eat into their tablet business. As for phones, there’s Google’s $12.5B subsidiary, Motorola Mobility, another irritant for Samsung and other Android smartphone makers.

It’s interesting to consider whether Samsung think that the Nexus 7 is a challenger. I tend to think they’re more worried about what’s behind it: lots of content.

As Jean-Louis says, it’s going to be interesting.

Ending the Tyranny of the Telephone

How do we deal socially with the new technology around us? How do we come up with new norms, wrestle with the loss of privacy, deal with the way technology seems to force us to change the way we live, work and communicate,?

It’s not a new question, but I feel we need a new answer. We tend to focus on the intrusiveness of new technologies, and agonise over how they’re changing society, while failing to notice that the old technologies were just as intrusive. In fact, I’d argue that with each advance of communication technologies, they get less intrusive rather than more.  Our problem is that we have memories the size of hamster droppings.

Imagine a device that dominates every desk, every home, is on every street corner and train platform. Where we are so conditioned to answer its call we get upset when it’s left to ring. Even when we’re eating, praying, watching TV, asleep. Where we are expected to identify who we are, where we are to a disembodied voice at the other end, to run off searching for someone at its behest, jot down messages on its behalf.

Yes, of course I’m talking about the telephone. An awful device that intruded upon our conversations, our reverie, our concentration, our world. What is remarkable, then, is not how much we’ve submitted to technology but the speed with which we’ve embraced a different technology that better suits our world.

As quickly as technology allowed it, we have started ditching the idea of getting each other’s attention through voice. First we adopted the cellphone, but when users figured out they could use it to send messages by text or SMS instead, the telephone as a predominantly voice-driven device was doomed. It’s not that we don’t want to talk to people; it’s just that we want to ensure that the time and place are  convenient for both of us.,

The truth is that the telephone imposed its tyranny on us and dominated our lives so much that we still can’t let go of the idea. We still call our mobile devices ‘phones’ even when that’s no longer what they’re primarily designed to do. (I have a mobile phone that is as big as a croissant; this was not something that the ubiquitous ads touting its glories will ever show being held up  to the ear.)

Now, in 2012 most mobile phones are not used as phones primarily — if at all. Australians, for example, are making 12.5% fewer phone calls than five years ago. People have been giving up having a landline phone: South Africa’s Telkom, for example, has lost more than a quarter of its fixed line customers since 2000.  We have thrown off the shackles of a 140 year tyranny remarkably quickly, realising just how intrusive the telephone was.

Yes, we’ve replaced it with technology that can be antisocial. We download a lot of data over our device, and much of that data is personal, for our eyes only, or gaming with others not present. We ignore those we’re with, preferring the absorption of the small screen to the social complexity around us. But we’ll figure this out. First, we had to deal with the tyrant. Nowadays, in this mobile spring, look around you differently: listen for the absence of ringing phones. For once we have the technology — SMS, the instant message, the tweet, the email–to retrieve our lives.

My croissant sized phone, for example? It has a feature that, when I turn it over, mutes all incoming calls and sounds. Now that’s civilized.

In a Samsung Galaxy far, far away … will Android still rule?

A piece I wrote on potential roadbumps in Samsung’s ride to smartphone dominance. 

Samsung Electronics is the world’s largest smartphone manufacturer and biggest user of Google’s Android operating system.

And, for some, that’s the problem.

Samsung’s meteoric rise – in the first quarter of 2011 it shipped fewer smartphones than Apple, Nokia or Research in Motion, but is now market leader – has handed it a dilemma. Does it risk becoming a commodity manufacturer of hardware, squeezed like the PC makers of old between narrowing margins and those who control the software that makes their devices run, or does it try to break into other parts of the business – the so-called mobile ecosystem?

“It comes down to this sense of what it is they want to be,” said Tony Cripps, principal analyst at Ovum. “Do they really want to be one of the power players or are they happy enabling someone else’s ecosystem?”

To be sure, Samsung isn’t in any kind of trouble, and isn’t likely to be so any time soon. Later on Thursday, it will launch the Galaxy S3, the latest addition to its flagship range of smartphones. Juniper Research expects Samsung to remain the No.1 smartphone manufacturer this quarter. The next iPhone upgrade is expected around the third quarter.

“Android has done wonders for them,” says India-based Gartner analyst Anshul Gupta.

But still the company has its critics. They worry that Samsung has yet to address the central contradiction of it making devices that use someone else’s operating system. By licensing the free Android OS from Google, Samsung saves itself millions of dollars in software development costs and license fees, but leaves itself dependent on Google.

More at In a Samsung Galaxy far, far away … will Android still rule? | Reuters