5 reasons Google should be afraid of Samsung

Wilson Rothman , NBC News ? ? ? 3 hrs.

Google takes pride in the fact that its Android mobile operating system has outpaced Apple's. But the truth is, Android phones don't outsell Apple phones, Samsung phones do. Apple, Amazon, Facebook, Microsoft ? these may be Google's main competitors, but it's Samsung that could be the search giant's biggest threat.

As Samsung launches the Galaxy Note 8.0 this week, and the upcoming Galaxy S 4, not to mention a fleet of new Smart TVs, here are five reasons Google should be afraid:

1. Phones, phablets, tablets and more
Samsung has been the largest phone maker in the world for a while, but for the better part of last year, it was even out-selling Apple in the profitable smartphone category. On the surface, this is good news for Google, since Samsung is the largest ambassador of Android phones.

But compare the interface on a Google-branded Nexus phone to the software on Samsung's best-selling Galaxy S phones. The fundamental operating systems are the same, but everything from the stock apps (calendars, email, media player, etc.) to the interactive services (voice command, wireless file sharing, etc.) are different. Critics (including me) generally prefer Google's "pure" Android experience offered by Nexus devices (which also get faster OS updates), but the masses don't seem to mind Samsung's interface. And with time, money and momentum on its side, Samsung can keep improving.

The bigger the device gets, the more problematic things are for Google. Android phone apps may be a roaring success, but Android tablets have barely any native apps, especially compared to what's built for iPad. As evidenced in the expanding Note line ? which just welcomed an 8-inch model ? you can expect to see more Samsung-only features and interface tweaks, and increasing cooperation between Samsung and its software partners.

2. Retail stores
In an age when big-box stores struggle, Apple can still brag of its unbelievable (and mostly unforeseen) brick-and-mortar store success. Former skeptics now believe that the best way for electronics makers to reach their customers is through direct shopping-mall and online sales. Google is building up the online side, but recently rejected the idea of a retail store. Meanwhile, Samsung has quietly built out an online sales site, and is starting to show the urge to build some Apple Store clones of its own. In the meantime, it has clout with Best Buy, other mall retailers and even cellular carriers that Google could only dream of.

3. Mobile payments
Google got the jump on the competition when it comes to using your phone as a credit card. Built-in near-field communication chips in its Nexus phones combined with the Google Wallet system lets you, in Google's words, "shop faster, smarter and safer, in-store and online." Apple has been slower to get into mobile payments ? its Passbook app is a useful tool for those already checking into flights and buying event tickets online, but it's not yet a vehicle for commerce in itself. Now Samsung is making its own move with its own app ? called Wallet.

While the system, as it stands, currently resembles Apple's Passbook more than Google's similarly named service, don't forget that Samsung has NFC built into most of its premium phones. Not only that, as the Verge points out, it has a partnership with Visa to use the credit card company's PayWave service.

4. Media store
About two years ago, I laughed when Samsung tried to get me to buy a movie via its service on a cellphone. The selection wasn't great, and what was I going to do, watch some outdated action film on a phone's 4-inch screen? The laughter has, substantially, subsided. Those screens have gotten bigger, and Samsung has sold a lot of phones with its media store pre-installed.

Meanwhile, Samsung has expanded its media sales to its Smart TV line, and the current Smart TV interface dedicates a whole page to Samsung media. In other words, while you can still buy movies for apps like Amazon Instant Video and Vudu, you'll soon most likely stumble over stuff first on Samsung's page. How soon till you're giving it your $3.99 for a movie rental, rather than your cable provider or the competition?

5. Apple TV
Google's already spent its ammunition on something called Google TV, which you likely never bothered to purchase. Apple TV exists now too, as a cheap little add-on for Mac, iPad and iPhone owners, but Apple may yet pop a full-size TV that's so user friendly, fanboys would drool like they haven't drooled since Steve Jobs was alive.

Only thing is, Samsung already has an answer to Apple TV, and from what we saw at the Consumer Electronics Show in January, Samsung isn't going to rest until it gets the interface right. Does it need Google's help to do it? Nope.

(Bonus dirt in Google's face: LG recently went out of its way to buy a third-party operating system, probably so it wouldn't have to rely on Android for its next-gen smart TVs.)

Maybe none of this matters to Google as long as it can keep making money on mobile ads on Samsung devices ? but according to a recent report in the Wall Street Journal, even this relatively safe haven could be threatened by Samsung's explosive growth.

Further reading:
Samsung sparks anxiety at Google - The Wall Street Journal

Eyeing Apple: How competitors are finally making phones consumers want - The New Yorker

Samsung takes a page from Apple's Passbook with new Wallet app - The Verge

'Next generation' Samsung smartphones to ship with Visa NFC payment system - The Verge

Android boss Andy Rubin says Google doesn't need a retail store - Business Insider

Samsung's new retail store clearly inspired by Apple - Digital Trends

Wilson Rothman is the Technology & Science editor at NBC News Digital. Catch up with him on Twitter at @wjrothman, and join our conversation on Facebook.

Source: http://www.nbcnews.com/technology/technolog/5-reasons-google-should-be-very-afraid-samsung-1C8593123

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