Sep 03 AT 9:20 AM Dustin Earley 18 Comments

Googorola, Microkia and Apple have put hardware manufacturers in a tight spot

nokia lumia

A little over two years ago now, in the summer of 2011, there was balance in the smartphone industry.

Two of the biggest companies selling phones at the time took an integrated approach to their user experience. Apple, who was still growing at a seemingly unstoppable rate, and RIM, whose days were starting to look numbered, developed and manufactured both their own hardware and software. Apple with the iPhone, and RIM with numerous BlackBerrys.

On the opposite side of the spectrum were Google and Microsoft. Both companies were handing out their mobile OSes, Android and Windows Phone, to hardware manufacturers far and wide with allegiances to no one. Similar to Apple and RIM, one of those companies was enjoying massive surges in market share, while the other floundered.

Both approaches had contenders in the high- and low-end of the market share war.

It was in August of 2011 when we first saw signs that balance was shifting. Google had just announced they were going to purchase Motorola, and despite claims that the two companies would operate with a firewall between them, we knew it couldn’t be completely true. Here we are, two years later in August of 2013, and we’ve finally seen the end result out of the two merged companies.

Manufacturers like Samsung and HTC don’t have anything to fear, yet, but the Moto X is good. Word has it both companies are already looking for an alternative to Android to supplement their current lineup and protect themselves against the future. And that was before last night’s bombshell announcement that Microsoft is absorbing Nokia.

The balance that existed in 2011 is nearly nonexistent today. Third-party hardware vendors have a lot to worry about. BlackBerry (RIP RIM) is on its deathbed. Which leaves the three biggest companies in the smartphone industry, Apple, Google and Microsoft, with near complete control of the market. All three of those companies make their own hardware now, putting strictly hardware manufacturers in a tight spot.

Neither Google or Microsoft are going to stop making their OSes available to third-party manufacturers, but you have to imagine it makes them nervous. In 2011, few would have imagined that in just two short years, Google and Microsoft would control their very own hardware manufacturers. If I’m sitting on the board at Samsung, Sony or HTC, I’m taking comfort in the amount of money Google makes on my products, but I’m secretly having a panic attack thinking about what could happen another two years from now.

If I’m sitting on the board at Samsung, Sony or HTC, I’m thinking simply making hardware for other companies, companies that have their very own hardware manufacturers and don’t really need me, is not a sustainable business anymore. I need to ensure my future, and the future of my company. Should I fork Android and take the Amazon route? Look to Mozilla? Develop my own operating system? What do I do?!

It will take awhile to see the full repercussions of Microsoft’s Nokia acquisition, but this could very well be the turning point. Another two years from now in the summer of 2015, when Samsung releases the Galaxy S 6 running Samsung Galaxy OS complete with the Samsung app store and Samsung entertainment hub, remember this moment. The moment when being just a hardware vendor first started to look like a bad idea.

The scales of balance haven’t been completely tipped over yet, but from my perspective it looks like they’re on their way. Especially since, in this case, fear, uncertainty and doubt are most definitely not weightless.

Dustin Earley: Tech enthusiast; avid gamer; all around jolly guy.

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  • surethom

    Personally I do not see a problem with HTC, samsung & sony, as Android & Windows phone will always need third parties to produce devices, in the end the consumer is the decider, The nexus devices are heavily subsidized but more expensive HTC & Samsung devices sell way more.

    What may change is when Android/Microsoft user there hardware devisions produce hardware that shows where they want to go & then others can ass that feather onto there device, like always on voice?

    It will be a couple of interesting years to see where Motorola/Goolge & Nokia/Microsoft go from here on.

  • Timothy Anderson

    True…. but I also think that Google was forced into this position of acquiring Motorola by companies such as Amazon and Samsung trying to control the services, which is the whole reason for Android’s existence in the first place. I think if companies fork android, that would be a bad thing and bring a whole new dimension to the fragmentation problem.

  • Taylor Wimberly

    Why do you think Samsung is working on Tizen?

  • Adam

    As an iPhone user, I must admit that a manufacturer that simultaneously makes it’s own hardware/software leads to a better user experience. But I must say – I’ve always had a keen interest in Sony. Sony is the underdog in the smartphone race – and what people fail to realise is how much experience Sony have. Anyone remember Bada and Tizen? The latter isn’t even released yet but we all know what will happen when it is eventually released. This is why I believe that sooner or later – Sony are going to overtake Samsung. Yes, with over a decade in software expertise (Playstation, and almost everyone I knew before iPhone and Android landed had a SE phone. So did I, they were brilliant.) If I had the money, I would gladly sell my iPhone and get the upcoming Honami. Sony also has strong brand names and are innovating a lot more than Samsung. Sony are releasing the innovative camera lens, they have a strong games line up, and if they can merge all this into one single, new phone… The successor of Xperia. They’ll have a winner on their hands. A true winner. All they need is to develop their own software – and the only way to do this is to fork android, and keep a strong emphasis on their brands, along with their fantastic tie ins with their other products. NFC TV sets, anyone? Can you imagine a PS4.5 with NFC in which you can tap your phone and transform your set up into a supercharged Wii U.

    • SGB101

      Is sonys brand as strong as it was. Years gone by Sony meant quality, throughout the 2000s they lost their quality but relied on the brand name. This has gone someway to tarnish it’s brand.

      Many companies, even second tier ones, have better quality products.

      I hope their upcoming device is a glimps of what is to come. And I don’t mean just in the smartphone market, they need improvement right across the board.

      It’s only the playstation that has been quality out of Sony for some time.

      • ken

        Uh the Xperia Z which I own is outstanding build quality. And whinging about a 5inch device not having the best 180 degree viewing angles is pathetic. Are you really getting a bunch of friends to crowd around a screen that size? The craftsmanship is top notch, its waterproof and still looks tasteful, and Triluminos screens are awesome by all accounts.
        Its not like iPhone 5s champfered edges dont chip, or shatter into a million pieces the minute you drop them. The Xperia Z is actually durable

        • SGB101

          Sony have done a lot to turn the xperia name around, it’s been their flagship name since the nexus 1 days, it was horrific, the skin, can’t remember the name but it was very blue, sucked, and it didn’t have multitouch when all around it did.

          The experia Xi (iirc) done damage to there future android sales. As you say the new xperia is loverly, and made well. I personally would say it’s nicer than the HTC one, and, it’s not as popular.

          I don’t have an issue with Sony, I just think they lost their way for almost 20 years and now the brand isn’t as strong as it was.

    • DroidSamurai

      I guess that’s why you are an iPhone user. The Android world works very differently than the iOS world, and people who currently buy into the Android ecosystem thinks very differently than iOS users. That’s why when everybody says a 5+” phone was a joke, but Samsung’s bet on phablet open a new niche that turns into a trend. I am not a fan of Samsung’s phone — their design taste is horrible, especially on the software side. I used them as an example to illustrate why what works in the iOS world may not work outside of its realm. Unfortunately, Sony is like a bad copy of Apple. It’s Apple like, but lacks Apple’s skill. If HTC has enough money to stick around in the race, I would bet on its turning around before I would bet on a revival of Sony. In fact, if I rank the OEMs that are most likely to dethrone Samsung, I will put Motorola at the top of the list, then HTC, then LG, then Sony — or may be I will actually put Xiaomi above Sony.

      • Adam

        Actually, before this I had a Samsung Galaxy S2 and before that an S1. I was a flashing addict as well ;-) My S2 broke around the same time as by birthday so I got an iPhone for my birthday. Hopefully, I shall get a Honami for my contract upgrade.

        • SGB101

          Oorrr! Was you naughty that year;o)

    • Nick Gray

      Sony is actually not an underdog at all. Sony is sitting comfortably in the number three spot as Apple and Samsung battle things out for the first two spots. The reason why Sony may seem like an underdog is because they have nearly zero presence in the US market, so they get very little coverage. But that’s not the case in the rest of the world. Sony is working hard to improve its carrier relationship in the US. Once it has that figured out, Sony could give Samsung and Apple a run for their money.

      • SGB101

        They are on all the carriers in the UK, I’ve still never seen a Sony, Android, phone in the wild for a good few years.

        I’m amazed the amount of s3 and note 2′s I see, and the reduction of iPhones. That not me ios bashing, it just amazes me.

  • h0ruza

    Its really simple.

    To compete OEM’s need to stop thinking like Samsung or HTC and actually make a phone that carves a name for itself.

    Moto X has the right idea (Yes google is behind tham but think thought process is the key not the parent company). Throwing everything at it doesn’t mean you’ll have a top selling phone. The money spend that Samsung needs to back up it’s devices could be replaced by an out and out good product.

    make a great phone by applying great thinking. Bigger screens and front facing speakers can only be done so many times

  • Janson

    As far as I’m aware, Apple and Motorola make a tiny proportion of the components in their phones. They design, integrate, create software services and sometimes assemble their phones. But they buy their components, including the most valuable tech, like screens and processors from manufacturers like Samsung and LG. Businesses like HTC might get squeezed, but it’s tough to imagine that Apple or Google will be able to completely escape dependence on the innovations of these fabricators. And that will mean that apple, micro and google will be subsidizing the production of their hardware competitors…

  • RogueC99

    Are Samsung and HTC definitely going down this route, or is it still just at the rumour stage. If so, I hope they don’t go down this route!

  • bob

    3 biggest? I would say 2.1 biggest

  • donger

    Android > Windows phone end of story.

  • HeadDoc

    An interesting perspective, and making me consider Motorola as my next phone. However, right now Google REALLY needs Samsung: Samsung is the only really profitable Android phone maker, and the average consumer might not even know there are other options besides iPhone and Galaxy. I think either Google will start to play favorites with certain features for Motorola, which will prompt Samsung to re-consider Tizen, or make a new OS… OR it will happen in the opposite order. Interesting to see how it plays out. Still, why Google wouldn’t have released a Galaxy-killer with a top-spec Motorola-made Nexus phone by now is beyond me…