Samsung’s new smartwatch did the media tour yesterday and for all of its features, one thing stands out: it will only work with Samsung devices. Specifically for now it will be compatible with the Galaxy Note 3 and Galaxy Note 10.1. An article in Engadget commented, “while it will likely work with the GS4 [Samsung Galaxy S4]once that device gets an Android 4.3 update, we don’t expect that it’ll ever function with non-Samsung smartphones and tablets.”
That second statement is illuminating. It suggests Samsung is building its own proprietary ecosystem. Apple already has that with iOS, i devices and the App Store. Microsoft’s acquisition of Nokia portends a Windows 8 + Nokia/Lumina + Surface ecosystem. Google’s ownership of Android, Motorola and Google Play certainly offers a closed ecosystem option although that seems less likely.
Owning the Whole Stack
There certainly are advantages of owning the hardware and software stack. You don’t have to rely on third parties to enable the user features you want to offer. More important from a strategic standpoint is consumer lock-in by erecting higher switching costs. Apple pioneered this by integrating the iPhone and iPad and some of the standard Mac computer applications.
Samsung could be attempting to set up its own switching costs with the Galaxy Gear concept. It’s one thing to swap out your phone to another Android device manufacturer. If you also need to ditch your $300 smartwatch you may be inclined to stay in the Samsung product family.
Walled Gardens Require OS Control
The challenge for Samsung is that it doesn’t own the device operating system (OS). It relies today on Android, the progeny of Google. Google also makes mobile devices and therefore competes directly with Samsung. This means Samsung still relies on a third party for the brains of its devices and really needs to also utilize Google Play. Both technologies are owned by a direct competitor. Not a comfortable situation in any market, much less one as fiercely competitive as mobile devices. Enter Tizen.
Tizen is an open source mobile device OS championed by Intel and Samsung. It would give Samsung the ability to exert more control over the OS and reduce dependency on Google. Samsung announced it would release its first Tizen based phone later this year. Samsung is also unique in that it is more vertically integrated than the other mobile device providers. Even Apple buys its screen components from Samsung although it is moving to reduce that relationship. Microsoft has its own OS and now has a full suite of mobile devices. It looks to be heading straight towards its own walled garden based on the Windows 8 OS. How many platforms do you think the market support?
Do App Makers want another OS to Support?
What about all of the App developers out there? It is the apps that make mobile devices useful after all. Do these developers really want another mobile device platform like Tizen to support? Short answer. No. Supporting iOS and Android is accepted. Some are open to venturing into Windows 8. No one really has the stomach for another OS variation just to get to market.
But does owning the whole stack really erect high switching barriers? The executives at Apple didn’t think so. Look no further than Apple’s restrictions on the Amazon Kindle app that didn’t allow it to fully function on iOS devices. Apple understood that app portability was essential for lock in more than device lock-in. They appeared to be right given the decline in Apple market share to Android devices over the past year as app makers began to support
Apple also understood that having a lot of Apps was essential for users to love the utility of the device. It is hard to see Tizen getting the kind of App developer support already enjoyed by Android and iOS. This is likely a critical flaw in Samsung’s Tizen approach.
Who Benefits from Open Ecosystems?
Ironically, Samsung has been the biggest beneficiary of the Android open ecosystem approach enabling it to vault into the top position in global smartphone market share. Now that it has a lot of users, the company is trying to erect its own walls around a Samsung garden.
I can’t help but think this is all Google’s fault. The day it bought Motorola was the day full stack walled gardens were validated even if Google protested that it wasn’t the intent. Don’t be surprised if this trend reverses. The forces for horizontal specialization are strong.