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Why it's important for Apple to enter the wearable devices market

Part 4
Why it's important for Apple to enter the wearable devices market (Part 4 of 5)

Why Samsung replaced Android with Tizen for its Gear 2 smartwatch

Samsung replaced Android with its own Tizen operating system for its Gear devices

In a prior part of this series, we mentioned that in September, Samsung (SSNLF) released its first smartwatch, called Galaxy Gear, which ran Google’s (GOOGL) Android operating system. However, for its second-generation Gear devices, Samsung switched to its own operating system, Tizen, which is a Linux-based open-source mobile platform. Why would Samsung replace its operating system when it has been highly successful partnering with Google’s Android operating system? Let’s try to find the answer.

Smartphone OS Market Share_Q1 2014Enlarge Graph

Samsung and Android’s combination leads the smartphone market

Samsung is a leading player in the smartphone hardware market, with a share of more than 30%, while Android is a dominant smartphone operating system player, present on four out of five smartphones worldwide. According to a report from IDC and as the chart above shows, Android’s share of the smartphone operating system market is 81%, while Apple’s (AAPL) iOS stands at 15% as of Q1 2014. Microsoft’s (MSFT) Windows Phone and BlackBerry (BBRY) are struggling in the smartphone operating system market, with their shares at low single digits.

Why would Samsung replace Android with Tizen?

One reason why Samsung would ditch Android on its smartphones is that it wants to monetize its own operating system rather than Google’s. Owning an operating system helps a company earn a cut if a user buys a paid application. Apple is known to take a cut of 30% for every paid application, while the rest goes to the application developer.

Another reason Samsung would drop Android on its smartwatches is that it wants to differentiate its low-end devices from its high-end devices. There’s a danger that Samsung’s high-end smartphones could be cannibalized by its low-end smartphones if both categories use Android. Having Tizen on its low-end smartphones would create that differentiation.

However, the issue that Samsung would need to fix is the lack of apps on the Tizen operating system, whereas there are about a million apps available on Android OS. An abundance of apps has become an important criterion for the success of an operating system, as it’s not only important for consumers who use the apps, but also for developers who earn a cut when users buy paid apps.

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