Can This Single Court Case Wipe Out Your Investments?
Danny is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Ye Olde Smartphone & Tablet Investors:
Apple's (NASDAQ: AAPL) aggressive patent case against Samsung is breaking on the shore in waves, but don't let the splashes distract you too much. Your eyes should instead be on the subsequent torrents that could wash the beach clean afterward.
Other Companies at Risk
If Apple wins the case, the judicial hammer could leave a tsunami in its wake for the major smartphone and tablet space players. Who will Apple hunt first?
Google (NASDAQ: GOOG) investors should consider the similarities between the young, promising Nexus 7 to Samsung tablets. General physical attributes, like smaller width, can theoretically be linked to the iPad; Apple has never been shy in trying to claim patents for what most consider natural. When you combine that with the common Android software used by both Google and Samsung, a future trial and ruling becomes all the more feasible. Expect Google to make the next headlines in Apple-related litigation.
Not far off from those traits is the long-standing kahuna of 7-inch tablets, the Kindle Fire by Amazon.com (NASDAQ: AMZN). Like Samsung's tablets, the Kindle Fire uses Google's Android software. However, with the aforementioned Nexus 7 entering the small-tablet space, Amazon poses less of a threat to Apple's plans. They would be the second -- but easier -- pick in the patent shark frenzy.
Apple managed to temporarily ban competing Android devices earlier this year. A repeat of such litigation here leaves a conveniently vacant path for the rumored iPad Mini to occupy later this year.
Fortunately for Microsoft (NASDAQ: MSFT)'s Surface tablet, stark deviations are immediately apparent. You'll find few rounded corners on which Apple can make claims since the Windows device does not use Android icons. The keyboard accessory makes for a much stronger defense against hardware accusations, putting Microsoft least at risk for Apple's tactics.
Beyond the Beach
Luckily, not everyone is purely invested in these patent-infested and legally tumultuous waters. Google is making leaps and bounds outside of the mobile space, for example, with its self-driving car and Google TV. After they're done proving demand exists in those markets and have laid out some fundamental technology, why wouldn't Apple simply claim that they're returning to an old idea? That design "innovation" around the corners of the TV are surely a result of ingenuity and not simply affordable deviations because of cheap manufacturing overseas, right?
Fortunately, Apple has more than enough users to feed on as it is. Their practice of biting into -- and never letting go of -- consumers through closed systems like iCloud will ensure continued usage in the States. The brand's luxurious appeal will maintain its growth in Asia.
Amazon has its online commerce to draw upon for relative safety.
Whether or not they deserve a legal assault in the first place, Microsoft actually has the most to lose. Most of their business is in the digital space and reliant on growth through an operating system that hasn't claimed a major share in the mobile market.
Watch the Churning Waters
When a verdict is reached, expect lawyers to show up like sharks to blood. Beware the stocks of Apple's next target, especially if that happens to be Microsoft.
dfavela owns shares of Microsoft. The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services recommend Amazon.com, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.