I can't wait for Apple Inc. (Nasdaq: AAPL) and Samsung Electronics Co. Ltd. (Korea: SEC) to wrap up their courtroom fight. The war has been nasty, the evidence so far presented less than compelling, and the wounds inflicted barely worth a trip to the ER. If these companies would only look outside the courtroom they might realize consumers hardly care about their petty squabbling, while rivals must be thrilled their executives have been spending more time in a courtroom than in design rooms. Who's really winning here?
While the mainstream press and even many in the trade media provide blanket coverage of the lawsuit over how much Apple believes Samsung should pay for allegedly blatantly copying the rectangular shape of the US-company's iPhone and iPad, or some other design pattern, I have been itching for a return to productive competition by the two combatants.
The details of the lawsuit so far have been mind numbing. The story so far seems to amount to no more than the kind of jostling kids in a school yard might get into on a hot afternoon. I can just imagine a teacher trying to resolve the she-pinched-me-first-before-I-kicked-her quarrel. Apple and Samsung may not understand this, but that's how many in the consumer world view what is happening in that California courtroom.
Only the stakes are so high for the two companies. I am not referring here to any monetary compensation either party might get. No. They can both handle whatever the jury decides if it awards financial compensation for either party. In Apple's case, it can easily write a check from its more than $100 billion in cash and securities. Also Samsung, which along with its courtroom rival has pocketed most of the industry profits from wireless handset sales, has deep enough pockets to handle the $2.5 billion or so Apple is demanding if the case is decided in its favor.
But after the "he-said, she-said" that the two companies have spouted so far in the courtroom they will still both have to return to the market for the real duel for marketshare. Nothing dramatic has so far been revealed in court -- nothing, in any case, that would make consumers believe Samsung has been such a blatant violator of copyright or patent laws that they should shun the company's products. Apple may win the case on legal nuance, but it may lose in the court of public opinion where many are beginning to think the entire legal war is being waged to slow down a competitor rather than because Samsung has been egregious in copying Apple products. Of course, diehard Apple fans will disagree, and others will buy the company's products no matter what noxious fumes have been emitted in the courtroom.
I've believed from the beginning that it's the lawyers who will walk away as winners once the dust settles on the patent litigations that have mushroomed over the last couple of years, pitching most of the industry's leading manufacturers against each other. While there's a place for litigation, the evidence Apple has presented so far does not rise to that level, and whatever Samsung will be presenting over the next week as it makes its counter-argument will equally sway very few. Neither can claim ownership of many of the key technologies in wireless communication, and neither is going to win customer patronage by seeking to blunt a competitor's edge in this manner.
While writing this article, I thought again of Motorola Mobility Inc. (NYSE: MMI) and Nokia Corp. (NYSE: NOK) and the challenges facing these two companies. They were once leaders in this market, but their current positions tell us where winners are decided. Motorola Mobility is a wounded company; its new owner, Google. announced yesterday the company will be laying off 4,000 employees worldwide in an effort to be profitable. Nokia has announced similar large-scale job cuts.
Neither Apple nor Samsung were notable players in this market even 10 years ago when Motorola and Nokia ruled the wireless world. The two emerged from adjacent markets to dethrone the established players. So, here's my blunt message to the two companies: While you fight your silly courtroom wars and take your executives' attention away from the real battlefield, new rivals are plumbing holes in your market and eyeing the huge profits you hauled away last year.
They are on your blind side, and you may not even know who they are. They won't win this year or even in the near future, but the profit you are harvesting in wireless is too tempting, and you've opened up a crack for them to explore. Inflict dangerous wounds on each other. It will only help the unknown, maybe even the unborn, rivals.
"While rivals must be thrilled their executives have been spending more time in a courtroom than in design rooms. Who's really winning here?"
Nobody is winning and not only that but they are losing so much time with this case. The best way to prove to the customers that your competitor is a copywriter of your products is to design a new one but instead of this Apple spends its time inside the courtrooms.
Nemos, By the way companies find out they've been fighting the wrong wars the competition would have moved into their turf. It's never apparent immediately, though, because in Apple's case it is still King of the Hill. But so were Motorola Mobility and Nokia.
If you look at the mouth watering profits Apple and Samsung are making, it becomes clear also that competitors would like a piece of the action. To capture some of it, though, they would have to be more innovative than these companies. And they are spending time in the cellars conjuring up some sweet stuff we haven't yet seen.
It's not popular to talk about the possibility a company such as Apple may trip up in the future. When executives spend as much time in courtrooms as the executives of these two companies have so far done, something suffers and rivals take note.
I also think that nobody except the attorneys are winning here. I think the two giants should be able to find a middle way before they damage each other's public image. In such disputes nobody is 100% right and therefore both Apple and Samsung may lose blood.
I also feel that competition is very good for all competitors in the game as it pushes them forward. If Samsung and Apple lose each other in the competition, it will definitely have an adverse effect on both. Such huge companies should be a bit tolerable when it comes to lawsuits. At the end of the day, they both 'inspire' each other in many products and innovations they create.
Cryptoman, You may understand why Apple is angry and determined to see the case through. The company thought it had the smartphone market all sewn up -- just as it had a major share of the digital music player market initially with the iPod and today the tablet PC market with the iPad. Then Samsung came along and rose to the No. 1 position in smartphones. Apple's contention is that Samsung achieved this only because it copied the iPhone.
There is no doubt that the attorneys will be winners here, but after that, it's very difficult to tell. It will come down to the decision and how it divides up the marketplace for the two companies.
Eldredge, That assumes the marketplace will be divided up between the two companies. How about the rivals trying to capture some of the business? They are probably trying their best to stay out of the fray.
While reading this good article and posts, a very basic thought rised to me: despite there is still a long way to go and run in the field of innovation, we are only assisting to apple-samsung fight and rivals out of the fray. That means "winners, losers & nothing else". I aim this status will change soon.
@Bolaji - Right - there are more companies in this space, and I am sure they are intently following the outcome of this case to determine how it will impact the portion of the market that they have, or want to pursue.
@Eldredge, Agree! This will be a precedent setting case. I can see many court battles referring to the outcome of this battle in order to resolve their cases inexpensively and quickly. The money these two giants are spending, will overlap to the benefit of the smaller skirmishes that are bound to come.
Douglas, You are too much of an optimist. Previous Herculean legal battles have been fought over patents and other issues by companies determined to erase a competitor's edge or a perceived slight. Egos sometimes get in the way and in the case of Apple and Samsung, there are supersized egos swinging in the wind. This is why this case has gone this far.
The judge saw this and again asked the CEOs of the two companies to meet and try to resolve the problem because she thought there were dangers for both sides if the case was sent to the jury. The CEOs will meet but they still won't resolve the problem. Apple is determined to see this sent to a jury with the aim of forcing Samsung on its knees because Jobs wanted this.
Samsung won't agree to the terms Apple would like to avoid further court action. Whatever decision taken by the jury (I think it will favor Apple initially) will be appealed and whatever outsized payments Samsung is asked to pay will be reduced sharply by the court of appeal. This will all take years by which time the market would have changed and the winner of the current court action will find itself holding ashes instead of gold dusts.
Bolaji, I think these court and related things are concerned with the corporate world. Most of these Smartphone users are not concerned with such issues. They are bothered about pricings, functionalities, features, specifications etc. for corporate world; these cases are also a part of publicity for their products. At the end who will be the winner: Apple or Samsung or the Attorney.
Jacob, The attorneys will get their bite size payments and trundle off to enjoy this while Apple and Samsung will return to the market to continue the competition. Even if Apple desires this, a ruling in its favor will neither drive Samsung out of the smartphone market nor clip its wings. It is growing faster than Apple in the market and will remain No. 1.
As you correctly noted, many customers are not really paying any attention to the court dispute and won't decide whose phone they buy on the basis of a jury's finding. They may be impacted by the ruling, though. For example, if the jury decides a particular infringing product should be banned. However, the impacted company will quickly introduce non-infringing products. That's already happening in the tablet PC market where Samsung is introducing updates to its products in response to recent court rulings in Europe.
Thanks Bolaji, it seems more or less like a public debate only going to benefit both attorneys. Moreover I think now a day's it's like an advertisement for both the products.
To be frank I hope Apple to win be case. Compensation aside, this will show that true innovation deserves protection of the law. I have laid my hand on some Samsung smartphones and were mistake them as iPhone at the beginning, until I notice the icons in details. Better smash Samsung this time.
Bolaji, I own a Samsung Galaxy II phone and I am on my second iPAD, but I also had an iPhone 3 and 4. Now, if I compare the software and firmware with the backroom integration, I would rather have an iPhone than my current Galaxy. I agree with you that this dispute seems frivolus but it probably is just in the retained lawyers' hands and Apple and Samsung execs are both looking the other way. It is probably just business as usual now and Apple and Samsung are just collecting on their retainers.
Douglas, If it were only simply in the lawyers' hands, leaving executives free to focus on the business. The reality is far different. The impetus for the litigation came from the corner office (in Apple's case Steve Jobs allegedly vowed to spend all the money Apple had to break the rivals) and I am sure Samsung executives would like to take the rival down a notch.
Executives at both companies have held direct and court-ordered face-to-face talks, they've had to give evidence in court and many other managers, engineers, designers and other technical experts have been hauled to California as witnesses. These distractions will eventually take its toll. Would it have been worth it?
A regular melodrama. Maybe they will make a movie out of this...or a documentary...Applegate. Obviously I have not been following this battle but it sure seems important to some pretty powerful people. Twiddle Dee said to Twittle Dum, "Let's have a battle." I think they ended up fighting over a rattle.
I started a rant about some of the evidence before going on vacation and I thought I might be too hard on the companies so I filed it away for the future. But such revelations as "Apple had engineers sitting around brainstorming" and "Apple made a bunch of prototypes" before deciding on the current design...Needless to say I am shocked--SHOCKED--that such secrets are shamelessly being stolen right under our noses. Oh, the humanity! Someday, this saga will join the ranks of hanging chad (not 'chads'--there is no s on the end) and other landmark legal battles. Hmmm...wasn't the theory of evolution once debated in the courtroom? Whatever happened to those days?!???!
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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