Apple: Like or Follow?

Peter is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Apple’s (NASDAQ: AAPL) victory over rival/partner/co-dependent Samsung has sparked a lot of discussion.  A great deal of that discussion centers on the nuts and bolts of the decision itself and how it will affect Samsung, who cannot peddle 8 different devices to consumers in the U.S. who obviously want to purchase them.  But that misses the point, entirely.  Ultimately patent and intellectual property arguments end up where we are, with a court injunction against one company doing business and consumers being materially harmed in the process and other, inferior players, getting a leg up in the process.  The speculation here is that Microsoft (NASDAQ: MSFT) and Nokia (NYSE: NOK) will benefit from this ruling.

Apple’s success with its products has been a brilliant mixture of clever and empowering marketing and unsurpassed style.  They built computers and devices that were designed with care about how we interact with them, conforming to us not the other way around.  Apple has always been about pushing the user experience to facilitate your greatness, similar to how Nike markets their shoes, which is what has allowed them to sell at premium price things that really are just commodities.

Now they are the company that is telling consumers that those lofty ideals only matter as long as Apple is the one they choose to achieve greatness.  There are a myriad of reasons why a person buys a Samsung Galaxy Something over an iPhone X and it isn’t just the look and feel of the object.  Many people, in fact most people, are not willing to pay Apple’s premium.  And, so for that reason, they will now be punished by Apple in the marketplace by using the government to restrict choices. 

It seems this is fundamentally at odds with their marketing message.

It also feels like a sign that Apple is not interested in building great products first and leading the way in the darkness but rather has run out of good ideas and is now putting up a moat around their existing business, stooping to the same level of cronyism that other hated companies of the past (and present) have done. 

In the fashion industry there is not intellectual property protection.  The top designers are the top designers because they are simply better than their competition.  As artistic industries go fashion is orders of magnitudes bigger than those that squabble over IP issues, like music, TV and Film.  They welcome knock-offs sold in Target and Wal-Mart because it highlights the differences in quality for those they are selling to, which is not everyone.  The stratification of the industry is based on merit and a willingness to continually create the new and without the competition the designers would become stale.  Apple is not a company marketing to those lacking ambition; they are a company targeting those striving to become more.  But this design lawsuit says they no longer feel like they can keep them.

Modern patent fights in the technology arena are becoming tiresome for consumers.  For companies that realize they are not great at turning great ideas into great products patent licensing is a means by which everyone wins.  Microsoft’s revenue stream from Google (NASDAQ: GOOG) is a perfect example of this.  The boys from Redmond get a small cut, Google makes money selling ads and apps, and Samsung et. al. have a platform to sell phones and tablets.  All of that exists because Microsoft was willing to accept a $10-15 license fee for their idea. 

This lawsuit says that Apple is becoming ordinary and as just another ordinary company it now needs to be valued as one.  Investors should take note that this may be the biggest Pyrrhic victory since Netscape’s anti-trust lawsuit versus Microsoft.

IP issues like this will ultimately stifle technology.  This ruling will bring the same level of innovation to technology that exists in movies and TV vs. fashion.


PeterPham8 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Nokia. 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.

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