Apple Wins, But Android Game Not Over - InformationWeek

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8/27/2012
06:10 PM
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Apple Wins, But Android Game Not Over

Samsung lost an important legal round to Apple. But looking ahead, Google has Android patent weapons of its own.

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While Love believes that Google may be able to address many of the issues facing its Android partners via software changes, he adds that Apple has more leverage as a result of its victory. Apple's future patent claims, he said, will benefit from the fact that all seven of its patents were found to be valid by the jury. Usually, he said, 40% to 50% of patents get invalidated as they go to trial.

Apple's claim isn't just about money, which the company already has in abundance. "There has always been a sense that Apple has been in the case for non-monetary reasons," Love said. Apple's goal, he suggests, has been to affirm its role as "the true innovator of the smartphone market and that Android is riding Apple's coattails."

In a Deutsche Bank research note published on Monday, analyst Jonathan Goldberg wrote that in the wake of the verdict, "Apple looks poised to continue its strength in share of profits and consumer mindshare." During the trial, it emerged that Apple's profit margin for its iPhone has been as high as 58%.

Love observes that the smartphone industry could clearly be more competitive. "If Apple can just continue to do what it's doing and make those kinds of profit margins, then it has no reason to do much innovation of its own," he said.

Apple and Microsoft are the only companies making significant profits from Android, according to Goldberg, who estimates that Microsoft could be making close to $2 billion annually from licensing patents to Android handset makers. Google's Android profits remain small and among its Android handset partners, only Samsung reported profits during the past three quarters.

Goldberg believes Apple's patent win will make mobile carriers more willing to look beyond Android, perhaps to Windows Phone, for holiday handset orders. And he sees the further legal jeopardy for other Android handset makers.

"We believe the patents Apple asserted against Samsung apply to pieces of the Android kernel as well," Goldberg said in his research note. "Since few of the other Android vendors have much in the way of IP, it may be hard for them to defend themselves when Apple's lawyers come knocking on the door."

At the same time, the most significant threat to Android, Oracle's recent lawsuit against Google, has passed, assuming Oracle doesn't win a major reversal on appeal. And Google, now that it owns Motorola Mobility, has a hedge against partner platform defections. It can shift from trying coordinate its unruly ecosystem to leading by example, with its own hardware, if dissension among its partners becomes too great.

And in Motorola's patent portfolio, Google has weapons of its own. Goldberg writes that while many industry observers believe Google has shown its legal hand, he argues that there has been a failure to adequately consider the 1,000+ patents Google bought from IBM and Motorola's patent portfolio, particularly related to LTE technology. "We would not be surprised if a new LTE-capable iPhone became the target of a Google lawsuit," he said.

Yet a Google legal counter-attack may not be enough for Google's Android hardware partners, particularly those without formidable patent portfolios. In the end, Goldberg expects Google will have to indemnify its partners and limit their legal costs, noting that Intel pursued a similar strategy to assure the dominance of its x86 architecture.

Despite Apple's victory in court, Goldberg foresees continued success for Android. "We think Android will remain the market share leader this year, and the actual impact on the ground [of the legal situation] will probably be minimal," he concluded.

Love contends that Apple's all-out-war on Android has changed the character of Silicon Valley. "Many people would suggest that the reason Silicon Valley was as successful as it was was that they didn't go around suing each other," he said. "They tended to settle dispute by competing, by being more collaborative."

Apple's co-founder and former CEO Steve Jobs, before he died last year, told biographer Walter Isaacson that he wanted to destroy Android because it was "a stolen product" and threatened to wage "thermonuclear war" to achieve his goal. The problem with this approach is that nuking another nuclear state is the one thing most likely to provoke a nuclear counterstrike.

Despite Apple's win over Samsung, the biggest threat to Android may be internal. If among Android handset makers and Android developers, no one is making money, then it's hard to see how Google's version of Android can survive.

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mmuldoon52501
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mmuldoon52501,
User Rank: Apprentice
8/30/2012 | 7:59:09 PM
re: Apple Wins, But Android Game Not Over
So sad that his trial was allowed to take place in Apple's back yard. The first thing that should happen with any Silicone Valley technical lawsuit is a change of venue to somewhere in the Midwest. As a large portion of our population deals with agriculture in some manner we know when something stinks.
Flyingdog5000
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Flyingdog5000,
User Rank: Apprentice
8/29/2012 | 8:29:29 PM
re: Apple Wins, But Android Game Not Over
Apple actually lost on the rectangle with round corners count, so Samsung is doing a pretty good spin job saying otherwise.
achen907
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achen907,
User Rank: Apprentice
8/28/2012 | 8:19:00 PM
re: Apple Wins, But Android Game Not Over
Really?!? Apple won the case because they invented the round corner on the phone? What a basic shape has become a 1 billion dollar claim?!

Apple is beyond ridiculous in this case. I smell greed, absolute arrogant and no restrain as bully in the tech world. Their product is not revolution in design or innovative. They simply improve from existing product. Palm has the early tablet concept. Xerox has the early touch screen. Nokia, Sony Erricson create mobile phone. Should they all also sue Apple for infringement of their patent too?

While at it, maybe BMW could sue Mercedez for copying their round shape head light and red tail light.... absolute rubbish.

This is why I hate Apple and their fanatics minions. Common sense....gone with eaten apple.
tnoon
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tnoon,
User Rank: Apprentice
8/28/2012 | 8:09:50 PM
re: Apple Wins, But Android Game Not Over
Now it is time for the Government to step in with its "antitrust" case like it did with the Bell System, IBM, Microsoft etc.
gtigerclaw
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gtigerclaw,
User Rank: Apprentice
8/28/2012 | 7:17:40 PM
re: Apple Wins, But Android Game Not Over
"Apple's triumph over Samsung in its patent infringement case..." Unfortunately, Thomas, it's hardly a "triumph" when Samsung lawyers are already appealing it in the courts. You should do a little better research before you write an article.

This is just the first round of a long court court battle that could well backfire on Apple - big time. It's not an Apple Triumph until the game's over.
jkosin236
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jkosin236,
User Rank: Apprentice
8/28/2012 | 5:09:03 PM
re: Apple Wins, But Android Game Not Over
With this expect Apple to go after all the others with similar suites!
The gloves are off and Apple knows it can win the case; so, expect them to go after all the others imitating anything that looks remotely like an iPhone.
halseyjr61
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halseyjr61,
User Rank: Apprentice
8/28/2012 | 3:48:14 PM
re: Apple Wins, But Android Game Not Over
With this infringement case Apple has effectively embarrassed itself and the US (as Apple is the US's premier consumer technology company). Apple products are revolutionary in design and innovation but Apple is not 'leap years' ahead of it's competitors.
Apple products are overpriced and it's competitors work to produce competing products that offer near same innovation and in some cases better and introduce these products to the consumer at fairer prices.
Samsung did not have a prayer in that this case was heard in a California courthouse a mere 20 miles away from Apple's headquarters. Jurors were obviously residents in this geographic location and automatically gave Apple an immense advantage.
I am an American and very patriotic. With this in mind I love to see the US remain as a world leader in technology but remain a leader in fair play. Samsung is highly regarded by me. Their products are excellent and world-class and I believe that Samsung did not intentionally infringe on any existing patents Apple or others hold. The smart phone market requires standardization of certain technologies in order for for the entire communications system to work (IE data from a Apple phone connecting to a phone made by Samsung). We cannot have the difficulties we had in the past with the likes of Philips cassette tape vs 8-track, VHS vs Beta, HDDVD vs BluRay etc. A common platform must be established which will enable the segment to work and interact and this must be done without the fear of a manufacturer developing new technologies and features to an established platform.
Google graciously and intelligently offered it's technology to all smart phone developers to work on and that is world-class.
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