There's been speculation over the past year about the relationship between Google (GOOG) and Samsung (SSNLF.PK). A recent WSJ report states that Google is concerned with the dominance of Samsung and might stop further involvement with the company. There would be major benefits for companies like Microsoft (MSFT) and BlackBerry (BBRY) in case Google and Samsung split. Rumors have always given way to discussions, which later gets everyone thinking. Apple (AAPL) and BlackBerry are two companies that run a "solo" show - both of these companies have shown two extreme results. A Google-Samsung split would result in stock movements for many companies.
The effects of a split between Google and Samsung would not help either of them.
Samsung might have a good reason to ditch Android
Ever since Google's acquisition of Motorola Mobility, Samsung is aware of the fact that Google might turn from friend to foe. It would not surprise any of us if the key features of the Android operating system would be available only on Motorola devices. Samsung would take a hit if Google shows preferential treatment towards Motorola. Millions of Samsung users would switch to Motorola if Google announces special features and upgrades exclusively for Motorola. Why wouldn't they? I'm sure a significant amount of users would prefer solid software over heavy hardware. Google has denied all such reports and stated that they purchased Motorola mobility for their patent portfolio. When the time is right, I'm sure Google will make use of this window of opportunity.
Samsung's interest in other operating systems has moved stocks in the past
Last year, there were several reports of Samsung's interest in purchasing BlackBerry 10. Zach Epstein's article does show a 5% hike in the BlackBerry shares when Samsung was rumored to purchase BlackBerry's operating system.
This rumor did come up a lot in 2012. Samsung denied all such reports stating that they are not interested in such a deal.
It's not worthwhile for Google
Around 70% of mobiles run on Android, primarily because of Google's open source concept. Google gives away Android for free - this is the reason many smartphone manufacturers opt for Android. What has Google received in return? Well, the term "Google it."
The reason for Google to launch Android was not to sell phones. Android was Google's stepping platform to enter the mobile Internet market. Android was launched when Internet usage was shifting from desktops to mobile devices.
Though Google's expansion into various other products has confused many people, Internet revenue is what feeds the company. Thanks to Android, Google is still playing monopoly in the search market. Special treatment to Motorola would result in Samsung switching to another OS provider like Microsoft. It would not be just Samsung that would opt out LG, HTC and others could follow. The more OS market share Microsoft gets, the more search market share BING gets. It would be stupid of Google to risk such a scenario.
Samsung wouldn't benefit from this either
Samsung and Apple seem to be the only two profitable smartphone makers. Ever since Samsung launched Android driven smartphones, their overall graph has hiked. What benefits does Google give Samsung?
Samsung gets an operating system on devices free of cost. The company has focused solely on solid hardware production ever since they started using Android. Unlike Apple, they do not face the pressure of developing groundbreaking software. Samsung did go through a phase of developing their own software and that did not help them as much.
Google has plans of opening their own stores, a window of opportunity for Samsung. Google would definitely search for hardware partners to highlight their software and Samsung would be amongst the top contenders for such a partnership.
Samsung's Android devices feature Google mail, Music, Maps, Docs and YouTube. It would be an uphill task for Samsung to develop apps and reach the standard that Google offers through Android. Developing their own app for maps itself would be a challenge.
Samsung does not bear any costs on software for now, they have Google instead. I know for a fact that challenging Google on software is not what a hardware company should be doing.
Predicted stock movements if Google and Samsung do part ways?
If Google does call it a day with Samsung, many other smartphone giants would take their lead and do the same. This would cast a dark shadow on Google and raise many questions on Google's future in the search business - keep in the mind the fact that mobile Internet is the latest trend.
Though BlackBerry 10 is of no interest to Samsung, it might be an escape strategy for many other companies.
The company that would benefit the most out of this deal would be Microsoft. Windows Phone 8 would be the next best alternative if a company wants to ditch Android. Microsoft's online services like BING and the new cloud version of Office would see immense growth.
Though Samsung and Google parting ways looks highly unlikely, this could be one of the biggest tech highlights in 2013 if they do.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.