Samsung Earns More Profits Than Google

Moneybox
A blog about business and economics.
Nov. 16 2012 12:36 PM

How Samsung Beat Google

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Google and Samsung are key partners in the mobile phone platform wars. Google makes Android and Samsung makes the most popular Android hardware. But Horace Dediu notes that a funny thing happened on the way to Android becoming the market-share leader—Samsung is earning more profits than Google.

Now in any successful collaboration, someone will be winning more than his partners. But this is still an odd situation. It's as if back in 1999, Dell was making more money selling Windows PCs than Microsoft was.

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There are two factors that make this dynamic particularly curious. One is that Google owns a major mobile phone hardware company, Motorola. Motorola has fallen on hard times, but until very recently was a key player in this market. The other is that Android, unlike Windows, is "open" and ambitious companies can take its core and fork it to make their own thing. That's what Amazon did for its Kindle Fires. So in that respoect, Google has both more and less leverage over the Android ecosystem than Microsoft does over Windows. More because it has an established and credible hardware subsidiary, but less because in principle Samsung could actually try to seize control of the platform.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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