Can Apple really beat Android in the courts?

Can Apple really beat Android in the courts?

Summary: According to one analyst, Apple is certain to smash Android on the smartphone and tablets markets and will win billions. Really? I don't think so.

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Android is more than ready to meet Apple in court.

Android is more than ready to meet Apple in court.

If you buy the analysis of Deutsche Bank analyst Chris Whitmore, Apple is almost certain to beat the stuffings out of the Android vendors. I beg to disagree.

While Apple has been attacking Android smartphone and tablet vendors in the courts around the world, I don't see any reason to think, as Whitmore does, that Apple will be able to slam dunk their way to victory. Indeed, Apple's number one smartphone rival, Samsung, expects record profits despite Apple's lawsuit attacks from Germany to Australia and back again.

Whitmore, who has long been very bullish on Apple, proclaimed in his note there are four possible outcomes to Apple's intellectual property (IP) attacks. These are:

1. Settlement with per unit license fee paid to Apple;

2. Apple handicaps Android's feature set and/or distribution and captures 25% of Android's future market share;

3. Draw: Apple wins some, loses some. For what it's worth, I believe this is far the most likely result.

4. Apple loses and must pay counter-claims.

Whitmore, dismisses the last two results without giving any real reason for doing so. Instead, he spends his time rejoicing over all the goodies of Apple's future wins.

In the first case, Whitmore sees Apple licensing its IP for $10 per Android device sold. He beleives that would push Apple's stock up by $35 a share. The better result though would be if Apple doesn't let the Android vendors surrender and instead forces them to avoid any hint of Apple designs; such as abandoning the rectangle as a shape for a tablet. In that case, he believes Apple would capture 25% of what would have been Android's market share and Apple's share price would jump by roughly $260 per share.

Apple iPad design - it's been done before (images)

That's all great Apple fanboy fantasy stuff, but it requires that Apple sweeps all its enemies in all the courts around the world. Its not that easy.

Indeed, Apple hasn't been winning all of is cases. Far from it, for example, the same German court that briefly blocked the sale of Samsung's Galaxy Tab 10.1 in the European Union is now fine with Samsung selling its slightly modified model.

This isn't to say that the Apple vs. the world litigation is over. It's not.

Indeed, as ABI Research points out in its recent study, Mobile Device Royalties Approaching the $20 Billion Mark, IP costs accounts "from less than 4% [of mobile device costs] if [the vendor] have a very strong patent portfolio to well into the teens. The average paid, weighed by market share, will fluctuate between approximately seven and eight percent. It gets much worse for a company with a weak patent portfolio selling 2G/3G/4G handsets with LTE [Long Term Evolution]."

Specifically, Philip Solis, ABI's research director for mobile networks told me that, "In 2011, the revenue from WWAN handset royalties is split roughly 20% for GSM [Global System for Mobile Communications aka 2G] handsets (down sharply from 2010) and 78% for WCDMA [Wideband Code Division Multiple Access/3G] handsets (up sharply from 2011). LTE [4G] handsets are just getting started with 2% of the revenue in 2011, but will grow steadily for the next several years." That's serious money.

As Solis said, "WWAN royalties on handsets are a significant source of revenue for companies holding the largest amount of essential patents." He added, "In addition to being a source of revenue for companies, patents are being used more aggressively for offense and defense against competitors."

It's not just Apple though, Solis points out, "Apple, Google, HTC, Microsoft, Motorola Mobility, and Samsung are just some of the companies that have been suing other companies or defending themselves in lawsuits. Apple has been very aggressive with its patent lawsuits around the world and is finding some success in banning product imports in some countries against companies like Samsung and HTC. In its aggressiveness, Apple is also running into antitrust issues in a few countries. For example, in Spain, Apple is undergoing an antitrust investigation after losing a suit against NT-K related to media tablets."

The Spanish case isn't well known. What happened was that Apple went after a small Spanish Android tablet manufacturer Nuevas Tecnologías y Energías Catalá (NT-K) for IP violations. Apple not only lost the case, NT-K returned fire by filing first anti-trust actions and now NT-K is going after Apple on charges of extortion. One wonders if Whitmore was aware of how, far from going victory to victory, Apple's constant legal attacks are sometimes blowing up in the company's face.

Besides, as Solis told me while, "Some companies are designing products with existing patents in mind from the beginning, while others design them and then worry about existing patents later. In any case, companies like Samsung tweak their products when they have to in order to avoid preliminary injunctions. I have also seen opinions stating that Apple would be better off working on licensing instead of focusing on trying to cripple competitors, which was Steve Job's person goal against Android."

Solis believes Apple could serve itself better by licensing instead of litigating. "I think Microsoft is a perfect example showing how Apple could be better off with licensing. By going for licensing arrangements first and using litigation as a last line of defense, Microsoft ensures revenue and gets revenue sooner. The example where Apple handicaps Android and gains market share could be an extreme example that assumes Apple wins all of its cases and that companies cannot figure out a work-around that avoids the patent or cannot innovate and come up with something even better."

Personally, I want to see Tim Cook, Apple's CEO back away from Jobs' vendetta against Android. While it's an Apple's stockholder's wet-dream to see the stock jump up several hundred dollars by beating down Android in every court in the land, in the tangled web of mobile IP lawsuits that's not the way to bet. I expect that after wasted hundreds of millions in legal costs Apple will end up still having to live with its Android rivals and compete with them in the marketplace instead of the courtroom.

Related Stories:

And this is why Apple doesn't want to settle Android patent lawsuits

Apple loses one in its iPad tablet war with Samsung

Apple's Worldwide War on Samsung and Android

Steve Jobs: Android a 'stolen product'

LG signs Android, Chrome OS patent deal with Microsoft

Topics: Tablets, Android, Apple, Enterprise Software, Google, Hardware, Laptops, Legal, Mobility

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  • RE: Can Apple really beat Android in the courts?

    Slamming dung sounds like something Steve Ballmer would do - then again I
    don't know much about Tim Cook.

    It's good to see Apple having to fight charges of extortion. I've found it disappointing that SCO didn't face such cases despite its shakedown racket and it's even more disappointing that Microsoft's shakedown racket is not being challenged.
    zoroaster
    • RE: Can Apple really beat Android in the courts?

      @zoroaster Apple will lose eventually and is becoming marginal. Did you see the Nielsen Wire and ComScore reports? In the court of public opinion--end users have decided and there is a mass migration going to Android. Anytime you have 20 million activations a month it is game over. Android has already won. If Android shut down tomorrow most would not go to Apple they would revolt against them for again attacking another much loved web experience. What they did to Flash was enough and why end users are buying anything other than Apple.<br><br>Also, in 2006 Engadget ran an article on Samsung's digital photo frame the design (http://www.engadget.com/2006/03/09/samsung-digital-picture-frame-stores-pics-movies-music/) is the splitting image of the iPad. I emailed the info to Samsung because apparently they have archived that product and their lawyers don't know. Apple ripped off the digital photo frame and Archos tablet and piece mealed ipad and is calling it their IP which is laughable.
      techenduser
      • RE: Can Apple really beat Android in the courts?

        @techenduser
        Apple copied the digital photo frame and the Archos tablet?
        HAHAHAHAHAHAHAHAHAHAHAHAHA! Now that's funny.
        Here is what happened.
        1) Apple releases iPad
        2) Much of the industry, tech pundits and posters like you, laugh it off because it's just a big iPod Touch. It doesn't have a "real" OS on it, in order to do "real" work, like your beloved Archos.
        3) iPad sells like crazy
        4) Industry scraps plans to put "real" OSes (HP Slate anyone?) and start slapping Android on their tablets. Biggest differentiator are ports galore and Flash.
        5) iPad still outsells them, including your beloved Archos
        6) Adobe finally realizes that Flash on mobile is dead. RIM is slavishly holding on to that Flash in the pan.
        7) iPad2 comes out and still outsells everyone, including your beloved Archos.

        Thanks for the good laugh anyways.
        MG537-23482538203179240121698430309828
      • RE: Can Apple really beat Android in the courts?

        @MG537 [i] Much of the industry, tech pundits and posters like you, laugh it off because it's just a big iPod Touch.[/i]

        Well... it IS an over sized iPod Touch, but then again, the iPod Touch is pretty much the standard. So I don't know why people didn't expect the iPad to sell well.
        Badgered
      • RE: Can Apple really beat Android in the courts?

        @MG537

        It really doesn't matter how successful prior art was or that someone did it better. You can't copy someone else's design and claim that you invented it, or as Apple likes to put it, "re-invented" it.
        boomchuck1
      • RE: Can Apple really beat Android in the courts?

        @MG537 Great job debunking the claim with laughter, and then addressing some argument that exists only in your own head. Meanwhile, you never ask techenduser for the article title, because, well, you don't need to read it because you just KNOW it can't possibly be true because... why?

        Since I don't think we can post links, Google "EDITORIAL: Apple's Patent Didn't Look Much Like the iPad -- or Samsung Tab 10.1".
        Here you see that the iPad doesn't look much like the Apple design patent - but the Samsung photo frame from 2006 looks more like the iPad than the design patent does. Samsung, not being run by someone suffering from obsessive-compulsive personality disorder, didn't bother filing a design patent on rounded corners though. That's r*e*a*l*i*t*y, and all the laughing in the world won't change it. Now I'm waiting for the usual suspects to "counter" with the last-ditch non-sequitur, "But Apple makes more money per device!"
        jgm@...
      • RE: Can Apple really beat Android in the courts?

        @MG537

        Uh, WTF?

        Your timeline is BS.

        Almost all the hardware in the iPad consists of commodity components.

        The HP slate WAS released, and it sold out immediately. Apparently, you simply can't even find HP's enterprise page.

        The hardware design on the Touchpad was ancient(in tech years). They scrapped it because rather than deal with Palm, HP waited for them to die so they could buy them. Foolish as one could argue the whole thing was, it abolishes the notion that these things were being designed independently before the iPad was released.

        Furthermore, you seem to have a problem distinguishing between mob mentality and crowd sourcing. HP sold more PCs than anyone else in the world last year, and that's not doing much for them at all. GM sold more cars in the world than anyone else the year they went out of business. Sales volume is evidence of technical or business acumen.
        tkejlboom
      • RE: Can Apple really beat Android in the courts?

        @jgm@
        Oh so you're telling me that Apple patented the rounded corner rectangle? If so, why didn't thet go after Archos as well? But r*e*a*l*i*t*y* is that Samsung has copied more from Apple including look and feel of interface, packaging and even their TV commercials look a lot like Apple's.
        As for that digital picture frame, do you expect me to believe somehow that Samsung was already working with Google and Android to release a full blown Slate? Really? Is that what you're trying to say here? Or was it just a somewhat more intelligent picture frame. Let me repeat that. PICTURE FRAME.
        Apple hasn't patented shapes, be it circles, squares, rectangles etc. They've researched and worked hard on their designs for many years and when they do release their product it is ready.
        But again, I guess you guys are going to repeat the patenting of rectangles myth many times over. It does make for a convenient strawman.
        MG537-23482538203179240121698430309828
      • RE: Can Apple really beat Android in the courts?

        @tkejlboom<br>My timeline is BS? It may be sarcastic, but I doubt it's BS.<br>As for commodity hardware, Apple has proven time and time again that it's more than just the hardware. It's about the combination of software, hardware, ecosystem and design (liberal arts) working together. The late Steve Jobs would mention that at the end of almost every event, yet the industry is just starting to wake up to the fact. <br>Kudos to Amazon for finally getting it partly right.<br>I don't know about the rest of your post about HP Touch Pad etc. They may have had an idea about tablets, but ideas and concept videos are not products. Apple used to make concept videos and have ideas during the Gil Amelio years. Glad they moved on.
        MG537-23482538203179240121698430309828
      • RE: Can Apple really beat Android in the courts?

        @techenduser Thanks for all the laughs. Or were you being serious?
        non-biased
    • RE: Can Apple really beat Android in the courts?

      @zoroaster

      Whitmore should pay attention to the SCO debacle when declaring an early Apple victory. I believe that much of what Apple holds patents for will be dismissed as prior art as the judicial process continues. Apple has some very limited success going on it's stock price is very high. Does Whitmore really believe this? Could he be executing a pump and dump? I don't now, but I can speculate too.
      fldbryan@...
      • RE: Can Apple really beat Android in the courts?

        @fldbryan@... It really does not matter. As long as the suit goes on it is good for APPLE.
        hayneiii@...
      • RE: Can Apple really beat Android in the courts?

        hayneiii@...

        I disagree. Negative publicity is already having an impact. I like the IPAD's development more than Android's but I'm seeing more of a push by IT shops towards a system they can control rather than Apple's closed environment.

        JMOAICBW
        fldbryan@...
      • RE: Can Apple really beat Android in the courts?

        @hayneiii@...
        [i]It really does not matter. As long as the suit goes on it is good for APPLE. [/i]

        The longer these suits continue to drag on, the more public opinion will demote Apple.. We are already seeing this.
        rhonin
    • RE: Can Apple really beat Android in the courts?

      @zoroaster Like every other analyst out there that has direct financial interest in Apple stock prices, he's talking out of his ass.
      Masari.Jones
    • RE: Can Apple really beat Android in the courts?

      @zoroaster slam "dung"?
      other *
    • It is not being challenged as there is validity to Microsoft's arguments

      @zoroaster
      unlike Apple, who feel that they are entiltled to other's intellectual property, simply because they are Apple.

      I would imagine that Tim Cook is highly adept at "Slamming dung", most likely a trait Steve Jobs and their board required of their new CEO
      :|
      Tim Cook
  • RE: Can Apple really beat Android in the courts?

    Deutsche Bank also put out a report a few years back laying out how SCO was going to crush Linux and take over the world.
    Teran
    • SCO is soooo not Apple. I agree SCO was silly and terribly wrong.

      @Teran ... Still there is a huge difference between SCO and Apple and their respective claims. Also as a final point Linux never needed crushing at least on the desktop where is still languishes.

      Pagan jim
      James Quinn
  • RE: Can Apple really beat Android in the courts?

    Doesn't Motorola have a preliminary injunction against Apple in Germany?

    http://www.macrumors.com/2011/12/09/motorola-wins-preliminary-injunction-could-bar-sales-of-iphone-and-3g-ipad-in-europe/
    hoaxoner