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Samsung exec disputes notion of tension with Google over Android

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BARCELONA, Spain--A Samsung Electronics executive pushed back against the idea that Samsung's dominant position in Google's (NASDAQ:GOOG) Android ecosystem is a source of tension between the two companies.

Nick DiCarlo, vice president of portfolio planning and product marketing at Samsung's U.S. mobile arm, said Samsung's Android sales have been "positive" for Android. His comments come after the Wall Street Journal reported that there is increasing tension between Google and Samsung, by far the largest Android OEM. The report, citing unnamed sources familiar with the matter, said Google executives are concerned that Samsung has become so big and could pressure Google to alter the nature of their relationship.

DiCarlo declined to comment on the report directly and said he is not privy to any conversations between Google and Samsung executives (Google also declined to comment, according to the Journal). Still, he disputed the notion that Samsung's success--it has become the world's largest handset and smartphone maker largely thanks to Android--should be a cause for alarm within the Android community.

"My interpretation is that we're a good partner and we build strong products that promote the ecosystem," he said in an interview with FierceWireless here at the Mobile World Congress trade show. He added that Samsung has been an overall "big positive for the [Android] brand."

"This is such an incredibly competitive industry that to call something 'done' today based on the status quo, no matter what the subject is, is never right," he said. "I don't think you can say that anybody has a dominant position at any time, because you've seen how many companies [were] at the top and aren't anymore."

The Journal report said Google's Android chief, Andy Rubin, said last fall at an internal Google event that Samsung could become a threat if it continued to outpace other Android OEMs. The report noted that Rubin said Google's acquisition of Motorola Mobility was a kind of hedge against that. Motorola is rumored to be working on a next-generation Android smartphone called the "X-Phone."

Analysts have flagged the tension in the relationship. "With Samsung commanding over 42.5 percent of the Android market globally, and the next vendor at just 6 percent share, the Android brand is being overshadowed by Samsung's brand, with the Galaxy name nearly a synonym for Android phones in consumers' mind share," Gartner analyst Anshul Gupta said earlier this month.

"I think that Samsung is going to adapt their business model. They are going to try and become a platform in their own right," IDC analyst John Jackson told FierceWireless. "Google recognizes that and so they need some recourse." He said Google may try to take a more vertically integrated approach with either Motorola or its Nexus line of devices, or it could change how it engages with other Android OEMs and help them more. "Google looks at its OS licensees beyond Samsung and it can't like what it sees," he said.

In the fourth quarter of 2012, according to Canaccord Genuity analyst T. Michael Walkley, Apple (NASDAQ:AAPL) and Samsung together generated 101 percent of mobile industry profits; and for all of 2012, the total was even higher, at 103 percent.

DiCarlo said that even though Samsung is the world's largest handset and smartphone vendor, that did not happen overnight and is not the result of "some fluky one-hit-wonder type of product." He said Samsung recognizes it's in a leadership spot right now and is well positioned to continue to lead thanks to its wide product portfolio. Its ability to execute globally and work with numerous carriers and wireless standards will allow for continued growth.

Samsung is expected to unveil its next flagship smartphone, the Galaxy S IV, at an event in New York City on March 14. DiCarlo declined to comment on the announcement but said that Samsung will continue to enhance its service and software offerings. As an example, he pointed to a new application called Video Discovery, which is available on Samsung's newly announced Galaxy Note 8 and which recommends TV content to users, allows them to download movies and TV shows from Samsung's Media Hub, Blockbuster or Netflix and lets users share content between tablets and TVs.

DiCarlo also confirmed that Samsung will stop building new devices running its homegrown bada platform and focus on the open-source Tizen platform. Applications built for bada will be able to be ported over to Tizen and Samsung plans to release its first Tizen smartphone later this year, perhaps as early as July, according to CNET.

DiCarlo said Samsung has always been a supporter of Linux-based platforms and that it wants to keep close tabs on the movement toward building apps based on Web standards like HTML5. "It's something that we have to make sure we're close to and know about," he said. He added that it is a good opportunity to take a leadership position with Intel but that Samsung has always supported multiple platforms. Some analyst think Samsung's support for Tizen is a hedge against Android, but DiCarlo said it is in keeping with Samsung's core mobile philosophy.

"This is not unusual and doesn't represent a strategic change for us," he said. "It's just continuation of what we've always done."

For more:
- see this WSJ article (sub. req.)
- see this The Verge article

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