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Apple's US$1 billion win over Samsung: Q&A

Christina DesMarais | Aug. 28, 2012
In what has been dubbed “the patent trial of the century,” Apple has emerged victorious beyond measure.

Q: What about upcoming productshow will Samsung need to pivot its products going forward?

A: Many of the patents at issue today had to do with the exterior design of the iPhone, so the biggest and most visible differences going forward will likely be in the shapes of Samsung's phones. Some would say that Samsung has already started to "pivot" its design. For example, the Galaxy S III and the Galaxy Note are visually distinct from Apple's iPhones. It is also likely that Samsung will spend some greater effort trying to distinguish its user interface from the interface of Apples iPhones.

Q: Samsung is a big supplier to Apple. How does a company get into a patent scuffle of this magnitude with a customer and not suffer in orders later down the road?

A: Samsung's business relationship with Apple may well be damaged, perhaps seriously. At some point, though, I imagine that someone inside Samsung gambled that the profits in mobile were bigger than the profits in component supply. Based on Samsung's latest quarterly reports, that appears to have been a good bet so far. We will see how a 1B+ verdict changes the equation.

Q: Could it be said that Apple effectively has a monopoly on the smartphone market?

A: Not at all. Even though the iPhone is spectacularly successful, most people don't realize that there are so many other types of phones in the market that iPhones made up only 17 percent of all smartphone sales last quarter.

Q: Regarding monopoly, this Vancouver Sun story says If Samsung has to redesign its devices, no other company will be capable of challenging Apple for the foreseeable future. Your thoughts?

A: This ruling is undeniably a setback for Samsung. As Apples most successful competitor, holding Samsung back may clear the way for Apple to extend its lead in smartphones. On a more fundamental level, though, I disagree with the assumption that the only way to effectively compete is to adopt the features of Apples phones.

[Note the Vancouver Sun article is more nuanced. It seems to be arguing that, from a business perspective, only Samsung has the wherewithal to compete with Apple. Removing them from the marketplace will make it so that nobody will have the business might to compete. That is a different argument, but one too nuanced to address here.]

Q: Does the ruling mean that innovation in the mobile space will grind to a halt?

A: Again, no. Companies will need to be much more careful about adopting Apple's design language. Other companies will be forced to adopt new and less Apple-like designs. This could lead to greater innovation in the mobile space. At minimum, it will lead to greater differentiation.


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