A Phone Threat to South Korea

Dan Radovsky, The Motley Fool
Updated

Who'd have thought that Google's (NAS: GOOG) acquisition of Motorola Mobility (NYS: MMI) would have sovereign implications?

Well, apparently it does.

The South Korean government has urged its major electronics companies, Samsung and LG, to join a coalition of other Korean companies in developing their own mobile phone operating system. A South Korean deputy commerce minister said that "In the long term, we cannot go on like this by solely relying on Google."

He was referring to the possibility of Google giving preferential treatment to its own smartphones and tablets now that it has acquired Motorola.

The phone makers' responses
That government response runs counter to the welcoming responses from Samsung and LG after the acquisition announcement:

"We welcome today's news ..." -- Samsung
"We welcome Google's commitment to defending Android and its partners." -- LG

But those endorsements were probably uttered through clenched teeth.

For Samsung in particular, the possibility of losing Android is quite worrying. According to researcher Strategy Analytics, it recently surpassed Nokia (NYS: NOK) and is currently fighting Apple's (NAS: AAPL) iPhone for leadership in smartphone handset market share.

But the Android OS has the lead by a wide margin compared to Apple's iOS -- 53% to 28%. Without Android, Samsung would become Sam-Sunk.

Other Android phone makers?
HTC (a Taiwanese company) and Sony Ericsson (a Japanese and Swedish company) also gave the Google deal an initial thumbs-up (with fingers crossed, probably). All four phone makers have ridden Android's skyrocketing growth in popularity the last two years and would be loath to lose the OS for their phones.

I wonder if Taiwan, Japan, and Sweden also want to hedge their OS bets with their own mobile operating systems. Hmmm.

At the time thisarticle was published Fool contributorDan Radovskyhas no financial interest in the mentioned companies. The Motley Fool owns shares of Google and Apple.Motley Fool newsletter serviceshave recommended buying shares of Google and Apple.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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