What to Expect from the Apple-Samsung Lawsuit

By Cecil Sales - August 20, 2012 | Tickers: AAPL, GOOG | 0 Comments

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You have to agree – it’s epic! Rightly labeled as the “Lawsuit of the Century”, the Apple vs Samsung case is the penultimate battle on the going war between the iPhone and the Android devices. Plus, there’s a lot at stake – justice, pride and $2.5 billion. Yep, this is one huge lawsuit!

To give you a brief outline on why Apple is suing Samsung in court, here’s the lowdown:

1. Apple (NASDAQ: AAPL) launched the iPhone in 2007. There’s no need to point out the massive success it achieved. And let’s face it, whether you’re a harsh Apple critic or not, the iPhone set the trend that other manufacturers followed. Though it’s flattering to be the benchmark for future products, Apple was not.
2. Google (NASDAQ: GOOG) (deciding they wanted a share of the mobile market), launches the Android OS to compete with the iPhone’s operating system – the iOS. The Android, unlike the iOS, was free and can be licensed to other hardware manufacturers. On hearing this, Steve Jobs apparently wanted to go “thermo-nuclear” on the Android and claimed the Android was totally based on the iOS.
3. The iPhone had a sexy design, so other manufacturers decided to be “inspired” by it and released their own phone models to compete against the iPhone. Once again, Apple did not like it at all. Not one bit.
4. Of all the manufacturers, Samsung did a good job competing against Apple for the lion’s share of the market place and with their release of the Galaxy line of phones was met with high success and rave reviews. The Samsung Galaxy tablets also ran on the Android platform and they directly competed with the Apple iPad. Now, this time Apple not only did not like it, but decided to sue them.
5. Long story short, Apple is suing Samsung on the grounds of patent infringement and is fighting against the sale of Samsung android devices.

Now, you must be thinking, can’t we all just get along here? It’s not like this is the first time a good idea has influenced other end products. Take a look at Family Guy. Obviously it was influenced from The Simpsons and South Park, but it’s still funny and each show is highly successful too. So why can’t Apple just let it go and take solace in the thought that they revolutionized mobile phones and mobile technology?!

Well, here’s the reason – Billions of dollars are at stake here and when money’s involved, nothing is funny. Apple is suing Samsung for a whopping $2.5 billion on patent infringement and as a result, Samsung has counter sued Apple for the same patent infringement grounds. The lawsuit trial began on July 30 2012 and will conclude on the 24^th of August 2012. Both sides have armed themselves with some top legal firms and some heavy weight lawyers . But here’s the question that’s actually being debated by some leading market analysts – Will the verdict affect consumers? What about investors? If so, who’s going to get burned?

Well let’s look at how Apple and Samsung are doing currently:

Apple’s recent performance:

1. Apple’s all set for the new iPhone launch and they’re currently offering a limited $50 price on existing iPhones in preparation for the latest model.
2. Very recently, Apple earned $22 million from Google as part of a fine that’s related to the Safari browser privacy.
3. The future’s looking good for Apple. The iPad is selling steadily and the new iPhone should get them fresh revenue.

Samsung’s Performance:

1. In contrast, Samsung devices are not doing as well as they expected. In the second quarter, Samsung has only managed to sell 37K units of its Galaxy Tab and this represents a disappointing figure for the Korean Giant. Whereas, Apple sold around 17 million iPads in the same quarter. A mammoth win for Apple.
2. Samsung still holds the majority when it comes to worldwide smartphone sales. In the second quarter, Samsung had 32.6% of the market share, whereas Apple’s market share stood at 16.9%. This is expected, with Samsung’s variety of models and better global market penetration as key factors to this result. But, this figure could take a nasty hit if the lawsuit goes in Apple’s favor.

Does this lawsuit affect normal consumers?

Let’s take a look at both the scenarios here. If Apple wins, then future Samsung models won’t have many of the awesome features of the android platform. This includes “Slide to Unlock” and “Pinch to Zoom.” Apple can’t sue Google for it’s Android OD since Google isn’t directly profiting from the Android (cause it’s open source, in other words – its free!). But Samsung is profiting from it, so in case Apple wins, then Samsung will not only lose money, but also the value of it’s smartphones and tablets. Plus, this win will give Apple extra incentive to go after other manufacturers, particularly HTC.

Now if Samsung wins its countersuit, then iPhone’s already high price tag will increase, since Samsung’s countersuit involves a 2.5% share on every iPhone sold for copying its patents (for instance, Samsung claims they were the first to provide multitasking features with music playing in the background).  So, Apple will have to increase its price because they’ll have to pay royalties to Samsung for patent infringement.

The trial has generated a lot of attention and debates between technology aficionados and market analysts, but more fundamentally, the concept of “intellectual properly being infringed upon” is marvelously showcased here. Apple feels its ideas have been stolen and have gone great lengths to claim justice for it. Samsung claims innocence and at the same time, is determined to give Apple a taste of its own medicine. Whatever the result may be, it’ll be interesting to see how the market reacts to the verdict and what steps both companies will take for their future strategies.

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