Apple Chest Pounding: We Crippled Sales of Two Samsung Devices in One Week!
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Apple’s (NASDAQ: AAPL) efforts to keep anything Samsung (SSNLF.PK) from being sold seem to be paying off. Most recently, the same judge who granted Apple a preliminary injunction to stop the sale of a Samsung tablet also granted a preliminary injunction to stop the South Korea-based company from selling one of its smartphones.
At issue are the Samsung Galaxy Tab 10.1 tablet and the Galaxy Nexus smartphone. The cases are being decided in the U.S. District Court for the Northern District of California. The legal battles center on Apple’s insistence that Samsung keeps infringing on its patents, a claim that Samsung naturally and vehemently denies.
No matter, Apple’s lawsuits against Samsung seem to be gathering strength, considering the U.S. District Court judge, Lucy Koh, has granted not one, but two, Apple requests that limit Samsung’s ability to sell devices that are giving the iPhone and iPad a run for their money.
First it was Samsung’s Galaxy Tab 10.1, which was rolled out in the U.S. last year. In that case, Koh said that Apple had pretty much made a good case against Samsung. The Galaxy Tab feels and looks too much like the iPad. She made that ruling last week.
Then just a few days later, she granted Apple another injunction request; this time over the Nexus smartphone. Apple claims that Samsung infringed upon one particularly important patent dealing with voice and search functions when it built the smartphone. Apple takes issue with the voice feature on the Nexus being too much like its Siri.
The only Samsung device Apple has not been able to sink its teeth into and get banned from sale in the U.S. is Samsung’s newly released Galaxy S III. This device, a combination of a smartphone and tablet, has been wildly popular. Carriers, such as Verizon Wireless (NYSE: VZ) and Sprint Nextel (NYSE: S) have reported getting the shipments late because Samsung didn’t seem prepared to meet the demand for the device. And when they have received them, the carriers say there have barely been enough to keep up with demand.
The fact that the Galaxy S III is still selling in the U.S.is not because Apple grew tired of suing Samsung or had tied up too much time and money in suing over the other devices. Simply, the same judge said she just didn’t have time to review the issue at that point.
That was a lucky break for Samsung considering the Galaxy S III is its flagship mobile device. As I wrote last week, it’s not thought that the injunctions on the tablet or smartphone will have much of an effect on Samsung’s earnings considering the many other products it offers. However, if Apple is successful in getting an injunction to ban the sale of the Galaxy S III, that would be problematic for Samsung. The device boasts its latest operating system and is competing directly against the iPhone.
For both injunctions to become effective, Apple had to post a bond that Samsung can tap to recoup losses it will incur if the injunction is found to have been wrongly issued. For the Nexus injunction the bond amount is $96.6 million and for the Galaxy tablet it was $2.6 million.
Both the Galaxy Tab 10.1 and the Nexus smartphone are powered by Google’s (NASDAQ: GOOG) Android. It is no secret that Google is Apple’s biggest rival, mostly because of Android. Sales of mobile devices powered by the operating system are quickly and steadily eating into Apple’s market share, and therefore its profit. I’ll venture out and state that Samsung's success is also encroaching on Apple’s ego – the company is widely respected for producing the best gadgets in the tech sector.
Furthermore, it’s also an industry darling, with some market players so enamored with the stock that they believe it will be the first to trade above $1,000.
These injunctions – I still can’t believe two in just one week against the same mobile device manufactured - are unprecedented. Even when the case goes to trial at the end of the month, I doubt any decision short of Samsung being banned from building any mobile device again would satisfy Apple.
Apple has a $553 billion dollar market cap and revenues of $142 billion. As the mobile device market continues to become more crowded, I’d like to see how much of its piles of cash Apple will be willing to spend in legal fees because they think a competitor copied it. When will enough be enough?
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