Tizen, the new mobile OS
(KRX:005930) and Intel
(NASDAQ:INTC), is a lot like Android
(NASDAQ:GOOG). Both operating systems are open source and Linux-based. They look and feel about the same, and smartphone users won’t have any problem switching between the two. Their logos, however, suggest a difference. When Google chose a personable green robot to represent Android, it was selling the system’s intelligence, with its integrated "brain" of Google Web apps and services. Tizen, on the other hand, is portrayed as a pinwheel – a toy that spins in whatever direction the wind is blowing.
In other words, it’s a platform that doesn’t discriminate.
Android has had a remarkably successful run in the four years since it debuted. Today, it comes on about half of the smartphones sold globally. In emerging markets, though – and Asia in particular – this success has been an awkward one. Google might be the dominant search engine and Web services provider in the US and Europe, but across the Pacific, that position is held by the likes of Baidu
(KRX:035420), and Yahoo Japan
(TYO:4689). Google’s Web apps are not always available, and when they are, they’re not generally preferred. The fact that Android is free, and has a large application base, means that manufacturers have adopted it anyway, but they’ve been forced to offer customized versions that strip away the Google content and replace it with less native content.
The situation has become particularly bad in China, a country Google famously “left” in 2010. Many of the company’s services are blocked, and even Google Play – Android’s app store, and its most direct source of revenue – is largely nonfunctional. Nevertheless, the OS has grabbed two-thirds of the smartphone market. Third-party app stores
are common, and Baidu’s search engine has replaced
Google’s on the vast majority of these devices.
This situation leads to a bad outcome for everyone: Consumers are faced with an inconsistent and malware-riddled experience; Google isn’t making money; Baidu isn’t finding the level of optimization and nativity it wants; and Chinese smartphone vendors are prevented from making a deal with local companies who value the market more. In 2012, Samsung sold 30 million handsets
in China – 18% of the market. That’s the kind of leverage that, in a competitive environment, would turn the company into a king-maker. Instead it’s stuck in a partnership with Google, who sees little revenue from Chinese sales -- and since the Galaxy S3 (and now S4) maker receives a percentage of Google’s (nonexistent) revenue, there’s good reason to believe the rumors of Samsung’s discontent
. The company would make more money, and better tailor its products, by striking a bargain with Baidu in China, Naver in South Korea, and so on.
Throw in the Communist Party’s displeasure with Android
, and its interest in fostering a mobile environment that will conform to national policy – that is, snoop on its users – and the incentive for change is strong.
Enter Tizen, the pliable OS. Samsung and Intel may be spearheading its development, but they’ve been joined by a conglomeration of Asian telecoms
, including Huawei
(SHE:002502), KT Corporation
(NYSE:KT), NTT Docomo
(NYSE:DCM), and SK Telecom
(NYSE:SKM). These firms have their thumbs to the wind – and their noses to profit – and it’s leading them away from Google. Tizen --due to ship on Samsung devices later this year -- will retain Android’s more desirable features, like the low price tag and the cross-compatibility between markets, but it will also leave room for regional adaptation, and allow for synergy with a wide range of content providers. Its similarity to Android means that applications will port easily. With Samsung’s size, the company shouldn’t have much difficulty convincing developers to make that happen.
Despite Tizen’s clear advantages overseas, analysts in the US tend to portray it as a response to Google’s purchase of Motorola Mobility. The theory goes that, with talk of a Google X phone
, and speculation that new releases of Android
will be strategically timed, manufacturers are worried about the platform’s neutrality. This may be true, but there's a more immediate reason for Google’s clients to look for an (at least partial) exit: Android is hurting their bottom line, in the international markets that happen to be growing the fastest.
The new operating system's progress will carry implications not just for the smartphone industry, but also for Google’s attempt to extend its search dominance. If Android fails, there will be nothing to prevent regional leaders like Baidu from entrenching themselves further, by entering partnerships with the mobile manufacturers. It will be a strange twist of fate if Google, the paladin of the open Internet, finds itself against the wall because Android wasn’t open enough.
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