Apple's $100m in legal costs are tiny - expect more lawsuits in 2012

Summary:Apple's huge legal fees are a very cheap insurance policy helping to protect massive profits.

Apple has been waging legal battles against rivals such as Samsung. It may have spent more than $100 million on legal bills in 2011.

Tim O'Reilly, the influential CEO of book and conference company of the same name, tweeted:

He isn't the only critic, you can see others here:

It might seem like a lot of money is being wasted by Apple, but is it?

It looks like cheap insurance: $100 million represents just 1/460th of just three months' sales — $46 billion in its most recent quarter. It's an even smaller fraction of total annual sales.

Companies take legal action to protect their business, and in Apple's case it's a very big business indeed: $112 billion in 2011. That would make that $100 million in legal costs less than 0.1% of total revenues.

That's a tiny cost to hedge against competitors. And Apple can't be accused of using patent lawsuits instead of innovating, like Interval Research -- most agree that it continues to bring out unique and useful products.

It's easy to see why Apple won't be pulling back in its legal claims. In fact, it'll probably "lawyer-up" even more in 2012.

Apple has an opportunity to go even further: protect Apple iPhone and iPad app developers from lawsuits. An important key to the success of the PC platform was the cross-licensing that Intel and Microsoft engaged in with other large tech companies. This created a safe development environment which led to a mass of applications and devices that propelled PC popularity and reduced prices.


Topics: Apps, Apple, Enterprise Software, Hardware, Software Development

About

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.Tom arrived in San Francisco in 1984, and has covered US technology markets for leadi... Full Bio

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