What Now, Samsung? What Now, Apple? - InformationWeek

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8/27/2012
09:17 AM
Serdar Yegulalp
Serdar Yegulalp
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What Now, Samsung? What Now, Apple?

Now that Samsung has gotten its butt kicked in court, what's next for the two mobile giants? What about Microsoft and Windows Phone? What about us?

When a U.S. jury handed in its verdict last Friday, siding heavily with Apple over Samsung in a bitter patent dispute, cheers and boos erupted from all sides in about equal measure. Depending on who you talked to (and where), it was either Apple being a brave defender of the freedom to innovate, or Samsung as a scrappy underdog challenging an all-but-monopolistic market leader.

The truth is most likely somewhere in between. And the future of this battle isn't so much likely to show us who's right, but rather just who's left standing. Here's what's likely to come next.

Samsung will keep fighting; so will Apple

Samsung is not content to pay up and walk away. They plan to appeal, and they might well be prepared to take the fight as far as the Supreme Court if they have to. Apple is happy to match them blow-for-flow.

It's not like either party can't afford to fight this. They have some $25 billion (28.37 trillion Korean won) in operating cash -- around half of Apple's $52 billion, but still nothing to sneeze at. Even a $3 billion fine would only make a marginal dent in Samsung's coffer, assuming they ever had to pony up in the first place.

This is also only one of several legal challenges between them and Apple, with different wins on different sides, none of which look like they're headed towards an easy resolution. This past week, the U.S. International Trade Commission ruled Apple didn't infringe on two smartphone phone technology patents held by Motorola Mobility (read: Google). But in South Korea, the courts there took a pox-on-both-your-houses approach and ordered both Samsung and Apple to stop selling certain products of theirs.

What's crucial is why the two are fighting so hard. Samsung's fighting these battles to have that much more freedom of operation both domestically and abroad. But Apple sees its struggles as downright existential.

Apple will continue to defend its turf by any means necessary -- but at what cost?

My colleague and former co-worker Mike Elgan made this point, in a piece entitled "Why Apple Sues." Samsung's full product line sprawls across multiple industries and product types. Apple, by contrast, has a small but carefully cultivated, meticulously developed, and massively successful line of products. Legal challenges are one of the many ways Apple keeps that product line undiluted and distinct in the marketplace.

You can argue the ethical merits of such things, but you can't deny Apple is well within its rights to do them.

What's less clear are the long-term consequences of Apple having such relatively small, jealously-defended turf and not much else to their name. There's a chance that Apple will, and in fact already has, become a company like Rolls-Royce: the purveyor of a brand whose appeal has become timeless, and thus doesn't change. Such things need little tinkering from year to year, and so as long as cell phones remain relevant Apple could survive by just making incremental modifications to a "classic" product.

But that smacks of a company resting on its laurels -- not the scrappy, pugilistic Apple of the early 2000s that took massive and bountiful risks. They need to get back to expanding their turf, not just guarding it.

If by next year it's clear Apple doesn't have a genuinely new product, and not just a new SKU of an existing item, I'm going to wonder if the fire under the company that Steve Jobs fueled has gone out for keeps.

Google isn't breaking a sweat over this

If they are, they're doing it very quietly. Google has to know that this is yet another of the many volleys fired in their direction by Apple, which despises the success of anything related to Android.

Google's not quite the behemoth Apple is: $43 billion in annual revenue compared to Apple's staggering $148.8 billion. But they're large enough that a battle of this size can be fought comfortably by them for a very long time.

A big part of why Google's not sweating much is because none of the missiles being launched are landing anywhere near them. If Apple fights a proxy war against Android, they only get proxy victories -- and they give Google that much more room to make Android less of a patent-and-lawsuit target over time.

Google's main venue for under-the-table support for its Android partners appears to be legal representation -- specifically, the law firm Quinn Emanuel Urquhart & Sullivan, which represents both companies with regard to patent and copyright litigation. According to various sources (mainly The Recorder), one of Google's key Quinn Emanuel lawyers, Charles Verhoeven, is apparently allowing his services to be provided to Android partners (Motorola, for one) via an indemnity agreement.

Where Google seems to be drawing the line, though, is a full-fledged indemnification scheme along the lines of what Microsoft offers with Windows Phone or what Red Hat offers users of Red Hat Enterprise Linux. Those things won't do much good against things like look-and-feel lawsuits, so they're using a more selective, case-by-case approach instead of blanket coverage. A smart move, since it frees them from the obligation of promising all their partners a safe ride.

Is Microsoft sitting pretty now? Read on to the next page for more.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
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