Apple Wins Big Over Samsung. Do Customers Win or Lose?

Aug. 31, 2012
Conjecture over who wins and who loses given the outcome of the recent Apple-Samsung lawsuit.

What we saw last week was a perfect example of business commerce by litigation.  It is very common in the electronics and software fields if you follow the news. You make money by suing someone.  There are whole companies whose only function is to buy patents, license them and sue others.

As you have probably already heard by now, Apple won their patent suit against Samsung for infringement of multiple design patents associated with the iPhone and iPad.  Now Samsung owes Apple $1.05 billion.  Apple, the world’s most valuable company (About $625 billion by a recent estimate.) now gets richer.   And they continue to dominate the smartphone and tablet markets. In any case, Samsung will undoubtedly appeal as they should.  I suspect that Apple’s next legal target is Google who may or may not have violated some of Apple’s design or software patents through Samsung and other Android handset vendors.  Time for negotiation and licensing.

I just do not know whether to be happy or sad about this outcome.  On one hand, I believe in the rule of law and Samsung was violating some Apple design patents.  They should pay.  Besides that I love Apple.  I have had a Mac since they came out in 1984.  I used that upright 9 inch mono screen computer until 1995 and have had many iMac versions since then.  And I have an iPhone.  They are all good.

On the other hand I can’t help but feel something is wrong with the system.  Samsung was trying to take a good design and duplicate or improve upon it.  That is what competition is all about.  Innovation today is the process of finding a way around a patent or beating it with an even better (patentable) design.  The idea is to emulate not copy directly and, of course, make it better.  Who knows whether Samsung knew they were copying or not.  In any case, they got caught.  And the outcome has to be higher phone prices for everyone.

Asian companies have always been emulators.  They are good at it.  They take a good thing and make it better.  And they provide excellent quality at reasonable prices.  That’s why, in case you haven’t noticed, the Asian companies own consumer electronics worldwide. 

The outcome of the suit is that Samsung, in addition to having to write that big check can no longer sell eight of their popular smartphones in the U.S.  I am sure the carriers that offer these phones are not happy.  Those eight phones account for billions of extra dollars a year in sales.  That loss it what really hurts. Luckily the hot new Galaxy S III smart phone was not affected by this ruling. Samsung being the leading smartphone provider will find a way around this going forward.  For example, they just announced a new version of their popular Note cell phone, the one with the 5.5 inch screen and stylus.  They also announced the first Windows Mobile 8 phone.  They will survive and will no doubt continue to be the smartphone sales leader.

What I am sad about this whole thing is the dampening effect that this ruling may have on innovation in general.  It has got to be a nightmare for a design team to keep track of the dozens if not hundreds of hardware and software features in any smartphone or tablet that will require a license of some sort.  With billions at stake designers will be even more watchful to avoid infringing relevant patents.  Can they do that while trying to innovate and make better products?

The big unknown is whether our dated patent system is working as it should or would changes provide the desired protection to the innovators while not killing off creativity and improvement completely?  (See one opinion at: )

It certainly appears that Apple will continue to prosper and get even bigger.  The rich do get richer. Rumors are that they will introduce the new iPhone5 September the 12th.  It should be another big hit.  The other rumor is about a new iPad Mini with 7 inch screen to be introduced in October.  It apparently targets the very successful and well-received Kindle Fire and Google Nexus 7.  Steve Jobs apparently said no to a 7 inch screen at one time but the market and competition may have changed the minds at Apple.  Amazon is expected to introduce a new and improved Fire before the rumored Apple introduction. 

Designing a smartphone is difficult today.  They all look alike and essentially work alike.  All have big screens, touch control, icons for the functions, and apps.  How do you change that into something that is better and different that customers will like and buy while not violating any patents or requiring a license?  Think deeply about that.  And for a clue, take a look at the new Windows Mobile 8 phones from Samsung, Nokia and others that probably do not violate Apple patents.

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