HTC responds to Apple; What's the long-term hit?
HTC responded to Apple's patent lawsuit with a statement emphasizing consumer choice and noting that it would "work within the U.S. judicial system to protect its own innovations and rights."
The statement wasn't exactly the usual "this lawsuit has no merit" line (Techmeme).
Usually a company that is sued responds with a little more bravado to such a high profile lawsuit. Among HTC's key quotes:
- "HTC is a mobile technology innovator and patent holder that has been very focused over the past 13 years on creating many of the most innovative smartphones."
- "HTC believes that consumer choice is a key component to success in the smartphone industry and this is best achieved through multiple suppliers providing a variety of mobile experiences."
- "HTC has focused on offering its customers a uniquely-HTC experience."
Also: How much will Apple's suit against HTC affect Android's momentum? [podcast]
The bottom line for HTC: Apple's lawsuit won't have a short-term material impact to the company's first quarter.
Now that worry is for the very short-sighted. Clearly, folks are wondering about the long-term impacts here. The New York Times reported a few analysts were worried about the long-term fallout.
KGI Securities analyst Vincent Liao said in a research note that the short-term impact to HTC is minimal, but then noted that this patent spat is going to last awhile. Liao wrote:
Such [patent] lawsuits normally go through bilateral negotiations or court proceedings, which could drag on for years. Second, we think Apple pressed this charge more as a strategic move than as a substantive action, and we suspect that Apple feels threatened by HTC’s new phone featuring Android version 2.1. The HTC’s Desire phone which debuted in Mobile World Congress 2010, for example, uses the Android 2.1 OS and capacitive multi-point touch control to eclipse the iPhone 3GS in terms of hardware specifications, while matching the iPhone in terms of user interface and smoothness of touch-control functionality.
The big question: How much of a distraction will HTC face with the Apple lawsuit? After all, the smartphone market isn't standing still. HTC is going to face competition from everyone from Nokia to Research in Motion to Motorola to Apple.
The worry: Apple's suit, if successful, could nuke almost half of HTC's revenue.
Meanwhile, it's also possible that HTC won't be able to keep rolling out Android devices without looking over its shoulder.
Let's face it HTC has bet big on Android. From HTC's earnings FAQ:
Q: Please comment Android competition landscape as late comers start ramping?
A: We see entry barrier actually becomes deeper for late comers to follow as HTC brings the Android innovation to next level benchmark by superior performance, proprietary HTC Sense user experience and operator-friendly customization services. We are confident to continue create value and maintain our leadership position on Android platform.
Simply put, it's an open question whether HTC will be able to continue to deliver charts like this with Apple looming large.
