The past week saw a historic ruling passed in favor of Apple
that could shape the future of the smartphone industry in a big
way. Last Friday, on August the 24th, a U.S. District Court
jury awarded Apple (
AAPL
) over $1.05 billion in damages after finding
Samsung
(
SSNLF
) guilty of infringing on six of Apple's 'design' patents. The
ruling was 'historic' not because of the high dollar amount,
which in itself is not particularly significant to either company
considering their huge sizes individually, but because of the
ramifications that the ruling has on future innovations in the
mobile industry. Also, with Apple making good on Steve Jobs'
claims of declaring a thermonuclear war on Google's (
GOOG
) Android, existing hardware partners may start supporting the
ecosystems of rivals such as Microsoft (
MSFT
) and Research In Motion (
RIMM
) in order to diversify away from Android.
Let's take a look at how the patent win affects the individual
players.
Apple-Samsung
Apple could use this as a precedent to press further
charges against Samsung as well as other Google's Android partners
such as Motorola and HTC. Apple has already filed an injunction to
temporarily ban the sale of some of the patent-infringing Samsung
devices in the U.S. If Apple succeeds in doing so, Samsung may
see only a limited near-term impact considering that these devices
are fairly old now and are nearing their end-of-product-cycle. But
it could set a dangerous precedent for a similar case that is
scheduled for next year that concerns some of Samsung's newer
models such as the highly successful Galaxy S III. (see
Apple's Patent Win Could Start A Fundamental Shift
In Industry Innovation
)
A successful ban on Samsung's products on U.S. soil could lead
to Apple pushing for similar rulings in other geographies as well.
With Samsung gaining a lot of smartphone market share and gradually
growing its presence in the higher end of the market as well, this
ruling couldn't have come at a better time for Apple. (see
Apple Falls Behind Samsung In Smartphone Sales But
iPhone 5 Is Near
)
This ruling also increases the value of 'design patents' as
opposed to the historically important 'utility patents. Apple,
being at the forefront of the mobile device revolution, stands to
benefit immensely from such a shift as the ruling has given its
near-exclusive control over some of the features that are now
considered essential for a smartphone experience. Other competitors
will now have to design effective workarounds to avoid patent
litigations and may be relegated to playing catch-up with Apple in
the near-term. This would make Apple's job at defending its market
position a lot easier, giving it sustained negotiating power with
suppliers and helping it maintain its high profit margins.
See our complete analysis for Apple stock | Samsung
here
Google
The ruling has given Apple enough cannon fodder to launch an
all-out assault on not only Android's most important partner,
Samsung, but also other handset partners such as Motorola and
HTC. It could severely weaken Google's plans of using Android as a
means to widen the reach of its search and other services if
handset partners start focusing on developing competing ecosystems
and try to diversify away from Android.
In that sense, the timing of this judgement couldn't have been
worse for Android. Microsoft is planning a big launch of its
Windows 8 platform, with the simultaneous release of multiple PCs,
tablets and smartphones by partners this year, including the much
anticipated Nokia's Lumia WP8 phone. Even RIM is planning to launch
its BB10 OS soon after in Q1 2013. While RIM has so far used the
BlackBerry OS for its own phones alone, it is
considering
licensing the OS out to other hardware partners as well in order to
drive the ecosystem development. With Apple going after Android and
Google possibly planning to launch its own phones through the
Motorola acquisition, Samsung and other Android partners may be
pushed into diverting their resources to focus on rival platforms
of Microsoft and RIM.
In a recent rumor, Google's CEO Larry Page seems to be in talks
with Tim Cook, Apple's CEO, to sort out the patent disputes and
protect its partners from further lawsuits.
Nokia
While Microsoft does stand to benefit in a huge way if this
happens, considering that it looks like it finally has a chance in
the mobile device market with the new revamped WP8 OS, Nokia's
bet on Microsoft also gets a boost. The Lumia smartphones may have
found favor with many technology enthusiasts but the
well-entrenched ecosystems of Apple and Google have left little
room to grow for Nokia. Carrier partnerships have not been hard to
come by (Nokia has already signed on AT&T and T-Mobile in the
U.S., China Telecom in China and is looking to add Verizon soon),
but getting people to warm up to the Windows ecosystem has proved
tougher with little support from other handset makers.
More support from partners such as Samsung and HTC, driven by
the Apple verdict, could see Windows Phones reach more customers
and fuel developers' interest in the platform. A better mobile
ecosystem of apps will help drive the sales of Windows Phones
in general and the Lumia in particular. (see Apple Patent Tide
Could Lift Microsoft, Nokia and Maybe Even RIM)
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