An Apple a Day Keeps Samsung at Bay
Ronak is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The two giants of the smartphone and tablet markets-Samsung Electronics and Apple Inc. (NASDAQ: AAPL) have sparred ferociously a long legal battle which came to a conclusion recently. Unfortunately Samsung Electronics would have to pay a whooping $1.05 billion to Apple for infringing the designs of Apple’s iPhone and iPad into its own smartphones and tablets. This is a very small amount compared to the total $200 billion market size for smartphones and tablets. This long lawsuit battle between the two giants has finally ended in the U.S. However, these two are still clashing over patents in other countries like the United Kingdom, Germany and Australia.
We can also see it as a proxy war against Google (NASDAQ: GOOG). It can be said because for every one iPhone sold worldwide, more than three smartphones (running on the Android) are sold reflecting the rise of Google’s software. But Apple is still one of the most unique concept in terms of its design and functionalities. Of all the effect one of the most talked about technical aspect is the “bounce back” effect (where when a user scrolls to the end of a list on the iPhone & iPad) and “the pinch to zoom gesture” (that users make when they want to magnify an image) apart from the feel good factor. The recent news updates talks about, the largest manufacturer of android phones, Samsung, been accused and found guilty of blatantly copying Apple's design and patented features. This is the reason that Apple still lures its customers and has a huge fan following.
Surprisingly Samsung remains a major supplier of components for Apple products. Apple might ask for an injunction which would prevent Samsung from selling its phones in the U.S. which may lead to the removal of millions of Samsung devices from the market thus turning back the table in favor of Apple with respect to market share.
Cumulatively Samsung and other Android makers easily outperform the sales of Apple’s iPhones. However now if the other handset makers move to less prominent software systems, like Windows or Research in Motion’s operating system (which is awaited to launch next year), it would give Apple a knockout-advantage in the marketplace.
What would the other companies making smartphones and tablets CHANGE?
The likeness and closeness such as shape, size and icons might be the initial things to change if companies innovate, but this might lead to consumer distress in the short term as the companies would design encompassing basic functions to evade breaching any of Apple’s patents.
a) Negatives: But the settlement could chiefly force it and other smartphone makers to rebuild their products to be less Apple-like, or jeopardize further legal defeats. This would hit Google's operating system, Android, as it is used by Samsung and a range of other companies in their devices. This could indirectly help Apple to hit its counterpart rival where it would hurt the most.
b) Positives: On the positive side we might see many companies coming up with a melange of new innovative designs in the market, some might even be better than the iPhone, some might be worse....Who knows?
Conclusion: This lawsuit is not that big a financial blow to Samsung, which is one of the world’s largest electronics companies in monetary terms. However there are some takeaways for the company and a red signal that they better pull up their socks before they lose the battle.
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