Is Google-Samsung Becoming the Next Microsoft-Intel?

Microsoft has finally named the third CEO in its history. To many, that decision appears to be more  of an historical curiosity than an urgently impactful event.

But it is worth remembering that there was a time when the company's strategic position appeared unassailable. The 'Wintel' alliance, which stood for Windows and Intel, dominated the tech universe. Apple was a feisty but relatively insignificant threat to the combine that ruled business and personal computing.

As the world turns - a not-inappropriate moniker for the soap opera that tech rivalries sometimes appear to be - that ancient but no longer fearsome alliance doesnt mean as much in a world now driven by mobility and the companies that have applied their resources to lead it.

Google and Samsung, however, are forging links that may offer similar advantages. In return for concessions on the hardware side, like the sale of its Motorola stake to Lenovo, Google is gaining Samsung's acquiescence to its drive for dominance in the software realm.

The world has changed and so it is not clear that the same sort of Wintel scale can be obtained by Google-Samsung, especially given the number of competent and well-positioned competitors they face over the variously emerging lines of development. But intellectual property is the glue binding this latter-day alliance and their ambitions appear to match their opportunities. JL

John Gapper comments in the Financial Times:

Are we seeing the emergence of a grand alliance between Google and Samsung for Android mobile devices, similar to the Microsoft-Intel alliance for Windows personal computers?

It looks like that from events this week:
On Monday, Google and Samsung announced a long-term patent licensing deal. That will give the two sides access to each other’s patented technology and allow Samsung to concentrate on its legal battle with Apple.
On Wednesday, Google agreed to sell its Motorola Mobility business to Lenovo for $2.9bn, marking a retreat from its two-year foray into making Android handsets. That means it will no longer be a direct competitor to Samsung in mobile devices.
The main point of its $12.5bn acquisition of Motorola was to obtain a trove of 17,000 patents, some of which were included in Monday’s deal with Samsung. It thus gained a stronger bargaining position.
Finally, Re/code reports that Samsung has backed down under pressure from Google on the way it varies the Android interface on its devices. It will downplay or possibly drop its new Magazine UX interface and give more weight to Google’s own apps. It reports:

“Google sees this as an opportunity to improve the quality of the Android community that has been plagued by fragmentation. However, it’s an awful lot of Google. It means Android is becoming more like an uber-Google experience than an underlying operating system topped with a selection of apps.”

Taking these three developments together, it appears that Google is asserting greater control over the Android operating system and the apps loaded on to devices while reducing its own hardware ambitions.
In other words, it is conceding Samsung’s dominance over hardware in return for Samsung promoting its software. The two will work together to reinforce the strength of Android software and hardware against competitors including Apple.
The Wintel alliance differs in significant ways from the Google-Samsung combination – Intel makes chips for PC makers while Samsung has become a device manufacturer itself. As Benedict Evans notes, the dynamics of the two ecosystems are also different:

“Certainly, this isn’t ‘Windows versus Mac all over again’. There are now 490m iOS devices in use, but PCs only hit that number in around 2000, long after Apple lost the last ecosystem battle. Apple sold 51m iPhones last quarter – total PC sales in 1995 were 59.5m. That is, the iOS ecosystem now is much bigger than the winning ecosystem back then.”

Nonetheless, something has stirred between Google and Samsung and the basic point – that a software-hardware alliance can be more effective that one company trying to do the whole thing itself (as Apple does), remains a powerful truth.