Just because there is a large competitor, you do not quit. Apple didn't and came from behind several times. Now if it is not profitable, let it go, but don't just give up and give it all to App/Goog(le) without a fight. Besides, 1% of a lot of people is still a lot of people.
Heck, when the iPhone was first released, Steve Jobs himself said he didn't expect to do much to the market - if he got 1%, he would be happy.
It's a big market.
Then again, Samsung controls around 90% of the Android market, and probably a majority of the phone market in general.
And yes, Tizen is probably just a threat tool - there was a point in time that it was supposed to be able to run Android applications. Samsung's got enough power in the Android market that Google may try to kick Samsung out of the OHA for trying to sell a non-Android phone that can run Android apps, but Samsung's got countermeasures. First, they are the only OEM who has complete replacements for every closed source app, including their own app store. Second, Samsung's got muscle - owning the majority of the Android marketshare means they can force their way if they have to.
And considering Samsung's got various OSes ready to go, I can't see it as more than a way to keep Google in its place - keep making the OS, we'll let you install your spyware/adware, and don't you dare threaten us.