Apple’s victory over Samsung smells different than most patent infringement cases marauding our courts. This wasn’t some picayune money grab by an NPE. And unlike Nokia, Apple doesn’t have to woo investors with a patent portfolio. Meanwhile, the $1.05 billion U.S. jury verdict reverberated from Android to the end user. Apple vs. Samsung has been polarizing on multiple fronts. Yet Apple should be more threatened by Google, more concerned about Android’s popularity and open-source credo. Samsung looks like the patsy in this case. Apple’s real nemesis is the operating system behind Samsung. Samsung may simply be in the way of Google.
Opinions are mixed on how Samsung’s violation of six Apple mobile technology and design patents will impact the future of smartphones. Android lovers feel violated, and analysts rue the verdict’s impact on product development. An optimistic minority argues both Samsung and Google - forced to design around now distinctive Apple mobile features - will elevate their mobile chops for the greater good. Investors? The market punished Samsung’s wrongdoings with a 7.5 percent drop in share price on the first trading day after the verdict was announced.
Apple did ask the judge to ban U.S. sales on eight Samsung devices. But looking at the guilty phones, Samsung wouldn’t be sacrificing any rainmakers. Not yet. So for a smooth billion, according to jurors, Samsung has ridden Apple’s coattails to the top of the handset world. The South Korean consumer electronics maker is now a monster in the $219 billion global smartphone market. This one loss seems worth the setback. For Apple, sending Samsung back to the drawing board buys more time to capitalize on the iPhone 5’s imminent launch.
Samsung, however, has more Apple trouble on the way. On Friday, Apple amended a second U.S. lawsuit filed against Samsung in February claiming infringement on eight patents unrelated to the current case. The amendment includes Samsung’s Galaxy S III, a true breadwinner, crowd favorite, and runaway success. Galaxy and Android make a formidable two-headed monster.
Regardless of numbers or sentiment, Samsung’s reputation as more imitator than innovator is being tested. Samsung is forever being accused of riding fast on the creative heels of companies like Sony and Apple. While delivering copycat products that compete on cost, quality, and more superficial design.
But Apple wasn’t sweating Samsung’s taste for ultra-slim bodies with glassy exteriors. And Apple claiming in the suit they invented both white and black rectangular phones won’t spin Samsung into bankruptcy. The design of interest to Cupertino is under the hood. The kind of proprietary smart design that makes Apple think the iPhone and iPad are worth more money.
Beating Samsung moves Apple closer to Android, the operating system Google owns and gives away to manufacturers like Samsung, Motorola and HTC. Google occupies a fuzzy space in the mobile world. Outside of owning Motorola Mobility, Google uses Android as bait to catch revenue from apps, media and mobile ads. Unlike Samsung, attacking Google for direct infringement may prove difficult for Apple. How does Google steal revenue from Apple by gifting its operating system to competing manufacturers?
But Apple’s win cut too close to the bone for Google to ignore.
Google issued a short statement distancing itself from the Apple vs. Samsung fray. “The court of appeals will review both infringement and the validity of the patent claims. Most of these don’t relate to the core Android operating system.” Yes, Apple’s claims revolved around Samsung add-ons and older phones. But Google would be wise to retrace design steps and ensure Android is truly a unique animal going forward. Ice Cream Sandwich to Jelly Bean, Apple’s iOS is watching.
As for toeing the industry line and blaming innovation for all these victimless crimes, Google is evasive about Android’s role in the mobile infringement frenzy. “The mobile industry is moving fast and all players – including newcomers – are building upon ideas that have been around for decades.” Steve Jobs may have had a different take.
According to his biographer, Jobs called Android “a stolen product.” Then added, “I’m willing to go thermonuclear war on this.” Google claims to treat its hardware partners equally. But the Motorola Mobility acquisition and Nexus 7 tablet hint Google may choose to mimic the Apple strategy of owning the entire mobile device: design, hardware and OS. Just increasing the chances of legal brawl over something more profound than colors.
That something begins with market share. According to IDC, Android powered 68 percent of smartphones shipped in the second quarter. The iPhone has 17 percent of an OS market fast becoming a duopoly. 85 percent share between two companies means Apple has nowhere else to shoot. Nielsen reported about half of U.S. mobile subscribers now own smartphones. Having increased 38 percent over last year, the U.S. smartphone boom validates Apple’s strategy of bulldozing Android-driven phones to get to Google.
However, despite the ongoing battle over operating systems, Apple and Google avoid an adversarial relationship. Google search is imbedded in Apple’s Safari browser. And Google’s GMail is featured in Apple’s App Store. With so much code and components packed into today’s smartphone, partnerships and litigation are destined to collide. Samsung contributes approximately 25 percent to the component cost of the iPhone. Ask Samsung. Nothing is sacred.
Reuters reported Larry Page and Tim Cook have been talking behind the scenes about mobile patents and intellectual property. Android makes a great icebreaker. Truce or declaration of war, Apple and Google are assuredly deciding our mobile device future.
Beyond making a powerful statement regarding IP protection, Apple’s motivation isn’t rooted in pinching or tapping. And the financial award for winning the case seems trivial to the most valuable company in the world. Anchored by Android, Samsung deserves credit for moving 10 million Galaxy S IIIs in less than three months. Apple wants to put a stop to it. Google is tough to catch, so Apple is attacking its most vulnerable, customer-facing link.
Whether innovation is stifled because beaten or scared hardware manufacturers have to retreat and redesign will be determined by the consumer. Apple’s triumph could impact cost, adoption and perception within Android’s more fragmented market. Tripping up Samsung and other hardware providers helps Apple break down walls leading to Android. As phones get smarter, Google gets more exposed.