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MUST READ: How Samsung Lost an Opportunity to Own Android

Fascinating editorial article from the JoongAng Daily regarding a tremendous missed opportunity by Samsung to buy the rights to Android.  Lee Chul-ho, editorial writer at JoongAng recently read the book, “In The Plex: How Google Thinks, Works, and Shapes Our Lives” and shared this golden nugget:

According to the book, [Andy] Rubin spent his own money to buy a plane ticket and visited Samsung Electronics to sell his newly produced Android. He recalled the visit very vividly. Dressed in a pair of jeans, Rubin and his coworker entered an enormous conference room, where about 20 executives in navy blue suits stood along the walls.

Rubin recalled that when the division head of Samsung entered the meeting, all the executives then sat down. It appears that Korea’s peculiar corporate culture made a deep impression on Rubin.

After Rubin gave his presentation, the Samsung Electronics division head gave a big laugh.

“Your company has eight workers. We have 2,000 working in that particular field,” Rubin recalled him as saying.

It was not a compliment. Before Samsung asked about Android’s price tag, negotiations broke down.

So, Google swoops in and buys Android for the hindsight bargain based price of $50 million.  Exceedingly cheap considering that Google paid $1.65 billion for YouTube.

What if Samsung owned Android instead of Google?  Well, it may have been able to corner the market on smartphones without a fruit as its logo and simply been able to cut HTC and Motorola out.  However, Lee Chul-ho believes that due to Samsung’s rigid management structure, they may not have been able to develop Android to a sufficient degree to make it market deployable.  It may have just languished as a “science fair” pet project in the bowels of Samsung’s extensive R&D bureaucracy.

  • http://www.bcarr.com Brendon Carr

    Samsung would have fucked it up for sure.

  • iMe

    Android? What’s that?

  • R. Elgin

    The quote is so much the typical example of Samsung arrogance and why they must change. What Brendon said — yep. I must give Lee Chul-ho much credit and I hope Koreans read this and take the message to heart; things would only get better

    Per #2, do some research lest we mistake you for a dumb-ass troll.

  • http://www.xanga.com/wangkon936 WangKon936

    Elgin,

    It’s going to take the Koreans awhile to change. Seriously listening to wide-eyed brainy/nerdy entrepreneurs in blue jeans and t-shirts and giving them mounds of venture money appears to be a uniquely American investment philosophy.

    In all seriousness, BIG missed opportunity by Samsung. But, I just can’t imagine a board room of stuffy ajoshis taking a young Steve Jobs, Andy Rubin or Larry Page seriously just as much as I can see a bunch of stuffy American executives from vintage 50′s or 60′s (i.e. Mad Men era) Big Blue or Hewlett Packard take them seriously either. However, that does give you some insight as to what era these ajoshi board members’ heads are at.

  • http://gypsyscholarship.blogspot.com/ jefferyhodges

    The arrogance of power, the powerlessness of arrogance . . .

    Jeffery Hodges

    * * *

  • http://coryinkorea.wordpress.com/ 코리아

    While if Samsung had bought it, they perhaps could have wound up with a half-way decent OS on their small market-share of phones, it’s Android’s connection with, and development by, Google that makes it so strong and the only thing that can stand up to iPhones. First there is the virtual connectivity, the auto-syncing and seamless integration of everything Google, which is an incredibly powerful tool. Second, there is also the mental connection between consumers and the company name. Google has the “cool” factor with the audience, probably the only company with such a presence to match or even surpass Apple. While the guts and user experience of the OS is what will keep the consumers happy, it’s that Google logo that helps get them to buy the phone in the first place.

  • cm

    #6, agree completely. It’s Google that put Android on the map. Samsung would not have been able to push Android. And it would have been easier for Apple to sue Samsung for the Android in entirety, instead of just against the smart phones.

  • http://www.eatyourkimchi.com eatyourkimchi

    “Your company has eight workers. We have 2,000 working in that particular field”

    Whatever happened to quality over quantity?

  • raintree_leaf

    I wonder what or where is that “We have 2,000 working in that particular field” product. Anyone heard anything about it? Or is it “2000 working in that particular field” to copy iphone and ipad?

  • theotherkorean

    Well Koreans lack strategic vision. That’s why this country ended up being occupied by Japan in the early 20th century and that’s also why this country won’t become as great as it could be.

  • http://www.bcarr.com Brendon Carr

    I wonder what or where is that “We have 2,000 working in that particular field” product. Anyone heard anything about it? Or is it “2000 working in that particular field” to copy iphone and ipad?

    It’s Bada. Although Bada hasn’t taken down iPhone or Android, it is outselling Windows Phone 7, and has taken 2% of the market.

  • Charles Tilly

    Well Koreans lack strategic vision. That’s why this country ended up being occupied by Japan in the early 20th century and that’s also why this country won’t become as great as it could be.

    Christ. Someone’s fucking dense. Yeah, reduce all that history down to “Korean can’t do the vision thingy.” We all need our mental shortcuts I guess.

  • iMe

    R. Elgin,
    I don’t know what you’re talking about. What research?

    Posted from my iPhone

  • http://www.japonymous.com Japonymous

    Brendon@11 – My understanding is that Samsung has, how shall I put this, “mildened” market expectations on Bada, my marketing it as a “not so smart phone” OS. An OS used more for the conventional flip phone, or call plus basic internet handsets. I say “mildened” because initially, it appeared as if Samsung was actually trying to set up an iOS, Android, Sybian of its own. So, when we look at the 2% market shares, what market are we really talking about. ALL phones or smart phones? Just curious.

    It is further my understanding that Windows Phone 7 marketing has not begun in earnest, as distribution of said system rests on the newly forged MS-Nokia alliance (Nokia’s US operations just announced that they will no longer be selling Symbian smart phones), and that the early models released thus far have been more like a means to test the market (or, this could be just spin, and the MS-Nokia alliance may be a spectacular failure).

    Some are projecting that as the Android centered, Apple initiated patent disputes get more and more traction, Google may be forced to charge the device makers for use of the operating system (as they will have to pay for licensing agreement – though other argue that Apple will refuse to license anything Android related to Google, as they want nothing less than the destruction of the OS) and Windows Phone 7 may thus grow in popularity, as Androids main competitive advantage will be removed.

  • jsjirn

    This issue has nothing to do with Korea and is a reflection of corporate culture in general and the flawed decision-making process that happens in a bureaucratic organization. Apple is always the exception to the rule since every major decision there must be approved by one individual; hence the “auteur theory” of corporate management as described by John Gruber and others. The case of Samsung and Android is not that much different from the case of IBM and Microsoft in the early 80s. IBM, like Samsung, did not have any leaders that recognized that the name of the game is software and not hardware. Why certain commentators on this website have to make this an issue about Korea or Korean culture reflects a lack of intelligence in general.

  • http://ulsanonline.com martypants

    Even if they ‘d had the fortitude to buy it, I doubt with every fiber of my being that they wouldn’t have made it open source. Without that, it’s worthless. They would have protected their investment and made it available for a price to phone manufacturers who may or may not have picked it up.

    And if they hadn’t blown that business strategy, making it available and accessible to the millions of programmers (myself included) who could learn from the multitude of tutorials and examples that Google created would have been beyond their ken as well.

    You don’t automatically have a wonderful, killer operating system like Android just because you buy it or even make it. You’ve got to market it and make it available to the developers who will create more with it.

    And speaking of marketing, I have create and Android app for teachers that I hope some here will find useful. Check it out here:
    https://market.android.com/details?id=com.ulsanonline.gradebook2&feature=search_result

  • Fullslab

    “Apple’s suit seems to have been filed with the intention of tarnishing “Samsung’s image, and the preliminary injunction was in this respect at least partially successful. However if Apple fails, it will have to fork out hefty damages.”
    http://english.chosun.com/site/data/html_dir/2011/08/11/2011081100691.html

    Why will Apple have to fork out hefty damages due to an injunction by a Regional Court in Dusseldorf, Germany?

  • http://ulsanonline.com martypants

    because they say Samsung stole their ideas. Since they are a component supplier to Apple for the iPad and iPhone products, they had special access to the devices before they were available to the general public. Apple says they took advantage of that and hefted some ideas.

  • SomeguyinKorea

    “First there is the virtual connectivity, the auto-syncing and seamless integration of everything Google, which is an incredibly powerful tool.”

    Right, because I absolutely need every person who’s ever sent me an email, regardless of whether I know them or not, to be listed as a contact. Yes, I’ve tried un-syncing contacts. Didn’t work.

  • cm

    Completely agree with #15 which says:

    “This issue has nothing to do with Korea and is a reflection of corporate culture in general and the flawed decision-making process that happens in a bureaucratic organization. ”

    How many other countries other than the United States have software and marketing forces that resemble the same way as Apple and Google dominate the world? I don’t see the British having something similar to Apple, nor the Japanese, nor the Germans. The ones who did for a while, the Fins (Nokia’s Symbian), they are on their way out. I don’t see anyone blaming Nokia’s failures on the Finnish culture or the Finnish people.

  • R. Elgin

    “This issue has nothing to do with Korea and is a reflection of corporate culture in general”

    This is true enough, in general. I hope Samsung and others can turn away from this vice and hubris to do something better because the positive impact upon the country would be enormous.

  • http://www.xanga.com/wangkon936 WangKon936

    Samsung needs a software version of Peter Schreyer, Kia’s chief designer. They need to be tolerant of his somewhat eccentric ways and give this person the freedom to base his (or her) software department outside of Korea, maybe California’s Silicon Valley, South Orange County or San Diego (where a lot of the good programmers like to live) and as far away from the stuffy ajoshis in suits as possible.

    Schreyer makes it a point to keep his design department in Frankfurt, Germany, which is probably a pretty good idea, and commutes to Korea from time to time.

    http://www.autoweek.com/article/20110505/CARNEWS/110509928

    “Schreyer makes monthly trips to Seoul for regular meetings with the heads of Kia’s South Korean and U.S. design studios. Mediating culture gaps remains a challenge.”

    Hahahaha…

    Here’s more:

    “The German design chief–with his signature black clothing and thick-rimmed eyeglasses–sometimes bumps heads with the conservative styling sense deeply rooted in a Korean boardroom that long valued safe, if boring, designs. But no one questions his mission.”

    Really? Ya don’t say…

  • R. Elgin

    Geez Wangkon, I’ve often thought Germans to be very stuffy in style though.

  • http://www.xanga.com/wangkon936 WangKon936

    Yeah, but Schreyer is a peculiar kind of German.

  • R. Elgin

    Oh my, that is a wonderfully humorous thought and maybe an apt way of putting it too.

  • UknowsI

    “How many other countries other than the United States have software and marketing forces that resemble the same way as Apple and Google dominate the world? I don’t see the British having something similar to Apple, nor the Japanese, nor the Germans. The ones who did for a while, the Fins (Nokia’s Symbian), they are on their way out. I don’t see anyone blaming Nokia’s failures on the Finnish culture or the Finnish people.”

    SAP from Germany? Google has 3 times larger profit than SAP, but the US is a larger country, so I would say it puts them in the same ballpark.