A Phrase For the Smartphone Space: “History Repeats Itself”
Rita is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
What took place between Apple (NASDAQ: AAPL) and Samsung is known to all. After weeks of arm-wrestling, the iPhone maker emerged as a winner of one of the most important lawsuits of the decade. Apple was successful in proving that Samsung had blindly copied its designs and several features. Following the ruling, Samsung reacted in witty ways. But none of those can dilute the effect of the fact that Samsung actually stole Apple’s IP. After this lawsuit, in my opinion, Samsung’s brand value has diminished hugely. Owning a Galaxy SIII or a Galaxy Note 2 can never give me that satisfaction anymore which I would have enjoyed previously.
Now, let me tell you, my focus for today is not Apple or Samsung. I want to talk about Nokia (NYSE: NOK). Then, why did I speak so much about the companies-not-in-focus? Well, I thought it’s a good idea to explain the core of today’s discussion through a situation which everyone is aware of - Design matters and stealing is bad. Now, let’s get on with today’s discussion.
Seems like history is going to repeat itself, but this time the players involved will not be Apple and Samsung. Instead, Nokia will star in the show and will be playing Apple’s role while Samsung’s role will be taken up by HTC. You are guessing it right! After the first season with Apple and Samsung, the smartphone war is back in action with its second season. In a recent development, Nokia is rumored to be in the process of filing a lawsuit against HTC, alleging the later to have copied the design of Nokia’s latest Lumia devices on the basis of their striking resemblances. Through the lawsuit Nokia intends to impose a ban on HTC’s 8S and 8X devices in a number of markets.
In the above picture you can clearly see how similar the two devices look. At a glance it will be really difficult to identify which one is from Nokia and which one is HTC’s. Like the Lumia 820 and Lumia 920, HTC 8S and 8X both run on Microsoft’s (NASDAQ: MSFT) Windows Phone 8 platform and offers features very close to that offered in the Lumia devices. So, the obvious question is, can this be a coincidence? I think not. Let me clarify why.
Some may say HTC couldn’t have copied the design from Nokia since the company made the announcement about the 8S only 2 weeks after Nokia’s announcement. Within such a short span of time HTC couldn’t have got enough time to look at one of Nokia’s devices and copy the design. People who say this will be ignoring one vital piece of information. Though Nokia announced the Lumia 820 and Lumia 920 not so long ago, the previous Lumia devices have been in the market for some time now and HTC had ample time to copy from them. There is not much of a difference among the latest and old Lumia devices when it comes to form and trade dress. There is a high probability that HTC analyzed the devices and then designed its latest phones.
Secondly, the prices of the phones are also suggesting that 8S and 8X’s similarities with Lumia 820 and 920 are not a mere coincidence. HTC is attempting to snatch away the market from Nokia by introducing very similar handsets at lower prices. A pre-ordered HTC 8S will cost around 400 pounds while a pre-ordered Lumia 920 will cost 460 pounds. Again, the fact that HTC’s representative is denying having received a direct complaint from Nokia regarding the similarities in the design, while Nokia actually had started legal actions against HTC in May, is looking a little fishy.
Nokia has a lot to lose if HTC starts selling the 8S and the 8X. As an agreement with Microsoft, all phones running on WP8 platform will come with Nokia Maps and Nokia Drive applications. Because of this, it will be very difficult for Nokia to differentiate its phones from that of its competitor’s Windows powered handsets. In such a situation, the added resemblance of the HTC devices will create further problems for the Lumia maker. The only consolation here is the recent development regarding Apple's CEO Tim Cook apologizing for the messy map problem. Apple Maps went horribly wrong as major landmarks found new places in the Maps and as errors rangings from misplaced buildings to duplicated geographical features emerged. Also, Apple Maps lacked several features available in Google Maps. Nokia is in an advantage here and so is Google as both have maps that function better.
However, there is bad news for HTC also. Though Microsoft made a promise to the Windows phone makers that it would protect them from lawsuits coming from companies such as Apple or Google, the company might not be able to protect HTC from a lawsuit from Nokia. The situation will get very complicated if one Windows phone maker sues another Windows phone maker.
Nokia has been struggling to grab a share of the smartphone market and WP8 is expected to give the company the much needed break. But, now with the HTC devices in scene, Nokia’s hopes of gaining a position in the market got a lot dimmer. The company has been taking several serious steps to change its current situation. It also invests over $6 billion a year in R&D, equal to what Apple on R&D during the last three years. After such steps and such huge spending, Nokia is not going to give up on its designs so soon. Design matters and Nokia will do everything in its control to protect that. The Finnish phone maker will surely put up a good fight in the courtroom and there are high chances that the outcome will follow that of the Apple-Samsung lawsuit.
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