Samsung Electronics Company, a South Korea-based maker of electronic devices, offers device solutions for businesses and products in consumer electronics, information technology, and mobile communications. The company, which began in 1938, is most recently known for its mobile devices Galaxy S and Galaxy Note, which are two of the most popular smartphones selling today. These devices operate on the Android operating system (OS) developed and owned by Google, Inc. (GOOG). While Google is well known for its search engine, it has many other business components like YouTube, Google Maps, Waze, Google Play, Gmail, and the aforementioned Android, an open source mobile software platform. But the relationship is not as straightforward as Samsung’s hardware (devices) using Google’s software (Android). Several other agreements and ventures have come out of this “marriage.”

Mutual Benefits

Google apps are crucial to helping Samsung stay competitive with its number-one smartphone archrival, Apple. In October 2015, Google added podcasts to its Play Music feature, making it more similar with Apple's iTunes.

Google’s Android OS is used in several manufacturers’ mobile devices, but Samsung’s devices have, by far, the largest market share. In the first quarter of 2015, Android devices held a 78% share of the smartphone market and Samsung had the largest share of any smartphone manufacturer with 24.6%, according to International Data Corporation. Since Google divested its Motorola businesses (the mobile division was sold in 2014), the ties between the Samsung and Google have become even greater.

While the Android OS agreement is the main component of the partnership, there are other aspects that generate revenue. For example, online revenue is a strong generator for Google, and Samsung produces much more of it compared to Google’s other mobile manufacturer relationships. This mobile ad revenue generates a strong stream for Google and the percentage shared with Samsung has been a reported bone of contention between the two parties. In fact, media sources have speculated since 2013 that the relationship will turn contentious if Samsung does not receive a higher cut. Reportedly, Samsung received at least 10% of revenue from the advertising agreement in 2013.

Another more recent development in the relationship is a patent share 10-year agreement between the two companies. The agreement signed in January 2014 will allow “Samsung and Google gain access to each other’s industry-leading patent portfolios, paving the way for deeper collaboration on research and development of current and future products and technologies,” according to Samsung’s press release. 

Finally, in the latest collaborative effort, Samsung and Google have forayed into the enterprise (business) and security aspects of mobile computing. Samsung and Google announced in June 2014 their collaboration to address the needs for a secure mobile platform that ensures privacy without compromising experiences. The VP of Android from Google noted that Samsung’s KNOX, “the only “Android provider of defense-grade and government-certified mobile security,” will bring enterprise-grade security and management capabilities to all manufacturers participating in the Android ecosystem.

The Bottom Line

Google and Samsung have more than a hardware/software relationship. Ad revenue sharing, patent co-licensing agreements, participation in open sourced projects, and continued collaborations that set the standards for future mobile computing (in both enterprise and leisure) and security are driving these two technology behemoths to define and lead mobile computing of the future.

 

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