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Understanding the Apple vs Samsung War

  • Apple and Samsung together sell 74% of all smartphones
  • Bitter divorce; Apple still uses several Samsung components
  • How the court case is a proxy war against Android
Written by Adam Wajnberg
15/08/2012

1 in every 4 smartphones sold right now is an iPhone. 2 of them are Samsung phones. And the other 25% are LG, Sony, BlackBerry, HTC or Nokia devices. So it’s not hard to see who the winners are in this race.

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iphone vs samsung

 

But once you look past the sales numbers, the story becomes less a marketplace battle and more of a divorce between two bitter people who still might love each other. Samsung builds many of the components going into Apple’s equipment; Apple is convinced that Samsung’s success in selling mobile phones and tablets have come from shamelessly copying Apple’s patented designs. Samsung’s best defense at this stage seems to be a mix of

-    How is a smartphone meant to look?

-    Everyone is copying everyone

-    Apple is a patent troll

-    Apple is stifling innovation by holding everyone’s feet to the fire, even companies it does business with

-    C'maaaaaaaan

All of which are fair points. But Apple went from being THE smartphone market to selling half as many phones as Samsung. Even though Apple has the upper hand right now (it makes far more money from each phone, thanks to its control of the software on it), it knows that customers entering the smartphone space right now will be establishing a branding bond that can be difficult to overcome. Apple knows this better than anyone – it’s what helped launch it into the rarefied space it’s in.


Begun, the mobile patent war has

Up until recently, Apple’s legal shenanigans have been considered a proxy war against Google and their Android operating system. Apple’s late founder and CEO Steve Jobs vowed to destroy what he saw as a system that borrowed heavily from Apple’s iOS operating system, without any of the years and billions in research. Jobs’ assessment wasn’t entirely unfair- Android began as an independent operating system designed to revolutionize the then-common phone market, but only after iOS did Google acquire it and make it a graphics based grid with individual, self contained ‘apps’, much like iOS.

Attacking Android was a little too difficult- Apple and Google share several technologies, and Google’s search engine and Maps underpins many aspects of iOS. Instead, Apple started peppering the legal landscape with lawsuits against Motorola and HTC, two early adopters of Android.

At the same time, Samsung was emerging in the mobile market as a proper challenger to Nokia. This was 2008-2009. Samsung had always had a reputation as a ‘fast follower’ when it came to electronics (it’s worth considering that Samsung is South Korea’s largest company, and is involved in about 100 industries). They would wait until a truly innovative company made something revolutionary, and then they’d release a wave of well made alternatives. They started as a fast follower of Sony and Panasonic; with mobiles, they saw that Nokia was the trendsetter and quickly followed their model.

But at this time, Samsung’s bosses made a decision for a massive seachange. Samsung had shaken off suggestions that they were a second rate Sony- Sony was slowly imploding, and Samsung’s goods were starting to surpass their Japanese rival in quality. With the alternatives-to-iPhone market emerging, Samsung was determined to control it.

Samsung isn’t just a fast follower – it’s a lightning fast follower. By 2011, it emerged as the world’s largest phone manufacturer, and the largest smartphone manufacturer as well. Apple, already embroiled in lawsuits all over the world, shifted their attention to Samsung.

The first silo was launched on April 15, 2011, with Apple taking Samsung to court in California for about 20 patent infringements on its Galaxy line of smartphones. Samsung responded a week later, taking Apple to court in South Korea, Japan and Germany…for about 20 patent infringements.

For Apple, the case was that the Galaxy line of phones and tablets were such blatant copies of the iPhone and iPad that their sale should be blocked in countries that honored Apple’s patent rights. They would win small victories; the Galaxy Tab 10 inch tablet was barred in Germany and Australia for a while, so Samsung responded by selling a 7 inch model.

Shenanigans

samsung vs apple

 

As lawsuits against other operators dropped, media attention zeroed in on the hijinks of Apple and Samsung lawyers in court. Stories were told of exasperated judges telling legal councils and CEOs to sit down and have lunch, and come up with a figure.

In December 2011, Apple’s lawyers responded to an exasperated Samsung cry for ‘What should a tablet look like?!?” by drawing up a design for a tablet with no rounded corners, no unibody construction, no single home button and no matte black and white finish. Behold, the Samsung Galaxy Tab, as designed by Apple:

apple galaxy tab thanks:gizmodo

The media went nuts. This was pretty funny. This abomination recalls Homer Simpson’s attempt to deliver the car for the American male. Headlines blared that Apple wanted to patent rectangles.

Recent developments

In July 2012, the UK court case came to an odd conclusion. Judge Colin Birss concluded that Samsung simply didn’t infringe upon Apple’s rights because Samsung products were ‘not as cool…and do not have the same understated and extreme simplicity which is possessed by the Apple design’, which might be a vindication of sorts for both parties, but also a kick in the teeth. For both parties.

Attention then shifted to the US court case in San Francisco. It was here in their hometown that Apple was going to finally stop dilly-dallying and come up with a figure for damages, and some proper evidence. They’ve done both, and it looks like we might be drawing to a close on this particular chapter.

Evidence

apple samsung case

 

Let it not be said Apple’s legal team lacks the same spirit of showmanship as their core business – when it came time to reveal their smoking gun, Apple delivered in spades.

On August 8, Apple delivered to the court “Relative Evaluation Report S1, iPhone”,  a 132 page internal Samsung document from 2010 which brazenly detailed every aspect that the management team disliked about the Galaxy S1, how it compared to a similar feature on the iPhone, and exactly what steps to take to improve the next version. The Galaxy S2 went on to become the first truly blockbuster Android phone with a chance against the iPhone, so Apple has a point in suggesting that this was not a coincidence.

apple vs samsung


As a “one more thing” bonus, Apple’s legal team also released email trails between Google and Samsung, in which Google execs warned Samsung that their Android phones were just a little too similar to the iPhone, and internal Samsung email trails where executives fretted that their phones weren’t iPhone-y enough.

Settlement

Apple had actually pinned a dollar figure on the case a week before releasing this evidence, of about USD $2.5bn. The figure is comprised of several itemized grievances, the biggest being an estimated $500mn loss in profits.

Most media commentators have pegged this to be the end point of the affair, with Samsung having been dealt a difficult blow to come back from (even though, strictly speaking, much of Apple’s evidence has been circumstantial). Further evidence has revealed that Samsung might have avoided this by accepting a licensing deal back in 2010, valued at $30 per device. That’s a pretty steep figure for licensing, but it would have come to less than that $2.5bn; it also would have obviated the need for all this litigation.

Samsung has this week decided to fight on, and suggested that Apple copied them with ‘Pinch to Zoom’ from a weird product they had built for Mitsubishi back in the 90’s. Apple has rested its case; Samsung seems determined to fight it out for another week, but it looks over.

Future

It’s hard to say what will happen next. If a settlement isn’t reached, it’ll be more bickering for a while. Ho Hum.

If a settlement is reached, Samsung might pay it and then go right on in its current direction, which is pulling away from resembling the iPhone anyway. Apple stops harassing them, simply because you can’t keep suing someone for the same thing over and over. Apple’s legal team is clever, but the judges might start throwing these cases back.

Apple gets a bit more money, and a burn on their reputation. Not a big burn. They’ll overcome it – so long as they continue wowing their fans. Their next big product reveal is slated for September; it’s widely assumed that a major iPhone overhaul and a mini iPad will be revealed, which might pull the typically Apple double-trick of bringing them in line with current trends, and then vaulting over the competition with something new. But it’s hard to know exactly what that ‘something new’ might be.

What IS for certain is that Apple has backed themselves into a corner. Business is business is business – Samsung was never necessarily going to start jeopardizing its other hardware business with Apple, even in the face of such a rollercoaster court battle. Google is and was an advertising company- Google wasn’t necessarily going to look at Apple’s naked hatred of Android and start pulling Google apps from iOS, from where it generates huge profits.
Instead, it’s Apple that seems to be drawing a line in the sand to separate themselves from the rest. They’ve switched to Japan Display and Sharp to provide screens for the next iPhone; they’ve eliminated Google Maps and implemented their own Maps program into the next version of iOS (only available to developers for now), and they’ve gotten rid of YouTube (a Google property) as a pre-loaded app.

Apple appear to be decoupling from Samsung and Google. Not completely – Samsung will still probably make system chips for the next iPhone, but Apple has also bought out a small Israeli firm called Anobit, that they may be grooming to take Samsung’s place one day. Google will still be the default search engine for iOS 6, but Apple is moving towards greater integration with social networks like Twitter and Facebook. Apple may not be able to live without Google Search, but Android won’t survive without access to Facebook and Twitter; and Apple might be able to slowly devour those firms, in one way or another, to secure their loyalties. Moo ha ha.

But really, Apple has to consider that Samsung’s reputation for power hardware, and Google’s for useful search, are at least as strong as Apple’s for great design. The iPhone was in part such a blockbuster because it brought the best these companies had to offer to market. Android devices that are forced to get rid of the design aesthetics they’ve ‘borrowed’ from Apple will suck, and Apple devices with conspicuously low-capacity insides and a crippled search capability will also suck.

Chess

Actually, the entire consumer technology industry seems to be squaring off into a big battle right now, and the battle lines aren’t too clear.

Microsoft has usually been perceived as Apple’s ultimate rival, but that wasn’t really true even when it was true. Microsoft started as a software maker for Apple. Apple eventually moved to Intel processors to accommodate software makers who relied on Microsoft. Microsoft is one of the biggest holders of Apple shares. They’re two American champions, continuing to make jobs in an economy that looks dangerously on the edge of collapse. They both pay taxes in California. Microsoft quietly paid Apple for the same licensing rights that Samsung rejected two years ago, in developing their soon-to-be-released Surface tablets. That could lead to more friendly implementation of Microsoft’s still-mighty Office suite into iOS. Apple and Microsoft have a bright future together, and they have bright futures independently of each other.

Sony is in deep trouble, most notably in its electronic business. An interesting wrinkle in the case is that Samsung revealed that early iPhone drawings had Sony logos; Apple internal communications revealed that the iPhone began with the question “What if Apple made a Sony Phone?” Apple’s love of Sony’s aesthetic has never been a secret, and the two companies certainly have something in common. A love for micro engineering. A love for music. A love for media. Clean designs. And, um, patent wars. Also: Sony is a major contributor to Japan Displays. Could Sony sell its electronic business to Apple one day? That would grant Apple an enormous boost in patents and hardware know-how.

Samsung, meanwhile, has its own means to acquire friends. Samsung is making ever better system chips for mobiles. They’re partnered well with Google, and currently act as manufacturer for Google’s ‘pure’ Android phone, the Nexus (HTC makes the Nexus Tablet).

Speaking of HTC – the Taiwanese powerhouse is fighting on as Samsung’s only real competition. Frankly, HTC can build a better phone. But Samsung sells more. We can see how that might go.

Samsung have publicly stated they’re not interested in acquiring RIM, the sputtering maker of the BlackBerry; but RIM still has a lot of patents, and plenty of good products that Samsung could exploit.

Don’t Forget

In 2006, the mobile phone wars were between Nokia, Motorola and Sony Ericsson, with RIM and LG making a dent. That was only 6 years ago. Things change rapidly in this business. In 2018, we might be wondering if Siemens will choose to acquire Apple, or if Wal-Mart will pick up Google after its advertising empire collapses. But it’s fun to speculate :D

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