Apple iPhone is top dog -- and Samsung's Google problem

By Jonny Evans

iPhone is king of smartphones once again. Apple [AAPL] sold 37 million of the things in Q4 2011, dashing Samsung from its briefly-held (numbering error?) position as world's number one smartphone vendor. Samsung, meanwhile, is watching its Android advantage become its Achilles' Heel.

[ABOVE: There were worldwide queues for the iPhone 4S launch last year.]

Business is booming

Global smartphone shipments climbed 54 percent to reach 155 million units in the quarter. Nokia's global smartphone market share halved from 33 percent in 2010 to 16 percent in 2011, prompting analysts to declare the smartphone wars to have become a "two-horse race".

Alex Spektor, Associate Director at Strategy Analytics, said: "Apple overtook Samsung to become the world's largest smartphone vendor by volume with 24 percent market share. Apple's global smartphone shipments surged 128 percent annually to 37.0 million units, as distribution of the iPhone family expanded across numerous countries, dozens of operators and multiple price points."

Apple also took 8 percent of global handset sales, making Tim Cook's compassionate company the third place handset vendor. That's a big achievement when you consider the global market for feature and non-smartphones. It also confirms the trend among consumers favors smartphones.

Android cultists may not want to read beyond this point. I warn you now that this is only speculation, but I fail to see why it doesn't make a degree of sense. Sure, it's not bound and gagged in handcuffs of certainty, but seems to reflect the patterns I see emerging in this space.

Screen_shot_2012-01-27_at_14_10_31.jpg

[ABOVE: Apple's iPhone sales numbers since launch. Featuring Martin Cooper, inventor of the world's first mobile phone, with, erm, a mobile phone.]

Samsung's Google problem

So why is Samsung worried? It has a problem. The problem is Google, Android and Google's new puppy, Motorola Mobility. Google (which attacked its customer's privacy with contentious new privacy rules this week) claims its existing Android partners can trust it not to favor its newly-acquired Motorola arm.

In business you don't trust promises, but action, and those Android partners are inevitably watching Google's future moves with suspicion, while voicing their confidence.

They know that Android suffers from its ubiquity.

Yes, you can get versions of Android on many, many devices, but what makes devices stand out when everything is the same? Pricing is already cut to the quick, caught in a vice of Apple's economies of scale and component costs; software is more or less identical; device design faces challenges of cost. Even the best is only as good as the best another company offers. That's fragmentation.

Samsung knows it needs to find something unique if it is to stand against not just Apple, but Microsoft with Windows 8, and, indeed, Motorola/Google once devices from there begin to appear. Arguably, Samsung -- the number one smartphone maker at one point last year -- has the most to lose in the event the GOOG/MOTO combo begin to manufacture integrated, well-designed Android devices. The market is already deeply competitive, so this could push things over the edge.

Samsung must be seeking choices

Samsung's response? There's a lot of smoke and mirrors, but it's possible it has begun quietly working to develop its own operating system for mobile devices. It has options, after all:

-- The firm last week denied it had plans to acquire beleaguered RIM. This gave rise to speculation that another firm may be making secret calls to Canada.

-- webOS? We know HP intends making the OS available on an open-source basis under the Apache License by the end of the year. "HP is bringing the innovation of the webOS platform to the open source community," said Bill Veghte, executive vice president and chief strategy officer, HP. "This is a decisive step toward meeting our goal of accelerating the platform's development and ensuring that its benefits will be delivered to the entire ecosystem of Web applications."

-- The recent week has also seen reports (now recanted) that Samsung intends merging its proprietary bada OS with the newly-revealed Linux-based Tizen operating system. Developed by Samsung, Intel and numerous MeeGo developers, Tizen is expected to show itself at next month's Mobile World Congress. Samsung -- which had earlier confirmed its intent to use Tizen -- now claims it has not yet made "a firm decision" on the matter.

"We are carefully looking at it as an option to make the platforms serve better for customers. As Samsung's essential part of multi-platform portfolio, bada will continue to play an important role in democratizing smartphone experience in all markets. Samsung will also support open source based development and continue to work together with other industry stakeholders," the company told AllThingsD.

-- Windows 8. Samsung will inevitably offer some smartphones powered by Windows. That's pretty much inevitable.

Dare to be different, or run with the pack?

What does all this prove? That Samsung has options. The question is only when or if the firm will choose to exercise them.

Given the increased pressure of the upcoming Nokia/Microsoft Windows 8 stab at the smartphone space and the increasingly chaotic landscape of the Android offering, Samsung executives must surely be feeling some pressure to make decisive moves to differentiate their products in this market.

And Apple? Apple meanwhile is plotting a course toward the iPhone 5. A device which will deliver new features not yet offered by competitors and which, given the recent success of the Christmas period iPhone 4S launch, seems set to trace new records in smartphone marketshare.

If you were Samsung, would you sit effectively in thrall to your friendly Google OS developer, or would you attempt to at least lay the trail to forge your own path to success within the rapidly-growing and strategically essential mobile industry? Dare to be different, or run with the pack?

What would you do?

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