Certain HTC smartphones have been blocked at U.S. Customs, putting the hurt on AT&T and Sprint. Does Apple care that its patent war is damaging its own customers?
The raging smartphone patent war appears to have claimed its first true victim: HTC. On Tuesday, HTC revealed that the One X and EVO 4G LTE Android smartphones have been held up at customs because of an exclusion order issued by the U.S. International Trade Commission (ITC) in December 2011.
In a statement, HTC explained, "The U.S. availability of the HTC One X and HTC EVO 4G LTE has been delayed due to a standard U.S. Customs review of shipments that is required after an ITC exclusion order. We believe we are in compliance with the ruling and HTC is working closely with Customs to secure approval."
Though issued last year, the exclusion order didn't go into effect until April 19. The fact that it has been applied to new phone shipments, and not HTC's older devices (which were the ones that infringed on an Apple patent) has taken some by surprise, not the least of which is HTC.
The One X hit AT&T's store shelves earlier this month, and the EVO 4G LTE was set to hit Sprint's store shelves Friday. (They are two different versions of the same phone.) At this point, AT&T has sold through its initial stock of the One X. It appears that the EVO 4G LTE won't make it through the review process in order to reach Sprint stores in time for the planned May 18 launch. Sprint is no longer taking pre-orders for the device.
For its part, HTC is looking on the bright side, sort of. "The HTC One X and HTC EVO 4G LTE have been received enthusiastically by customers and we appreciate their patience as we work to get these products into their hands as soon as possible," it said.
There's a bigger story here, though, that should have the mobile industry crying foul. Apple may have won a victory here against HTC by stalling HTC's devices at the border, but there's a greater expense: Apple's business partners.
AT&T and Sprint, the respective carriers behind the One X and EVO 4G LTE, are left stranded at the moment unable to sell these two smartphones. Both companies spent money marketing the smartphones, preparing staff and retail shipments, seeding review devices to media, and bringing the phones into their stables.
Sprint, in particular, has pushed the EVO 4G LTE hard as its best Android device. It's a very important phone for Sprint. The iPhone, on the other hand, has cost Sprint a pretty penny--nearly $16 billion over the next few years. Sprint CEO Dan Hesse has taken a voluntary $3.25 million pay cut over the cost of the iPhone to his network. Do you hear that, Apple? The CEO of one of your business partners reduced his salary by 30% thanks to his decision to sell your device!
How much is this patent-related delay costing AT&T and Sprint as they wait for the devices to clear customs? That's hard to gauge. If it drags on for months rather than weeks, it will have a material impact on the quarterly numbers for both carriers. Were I the CEO of AT&T or Sprint, I'd be on the horn with Apple and its lawyers all day and all night hammering out a way to move past this situation.
Let's be clear, AT&T and Sprint chose to sell the Apple iPhone. AT&T took a huge risk on the device in 2007. That risk paid off. How is Apple repaying its most vital customers? With litigation that is now tugging at their purse strings.
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