Apple, Samsung tussle over smartphone patent | Business| Economy and finance news from a German perspective | DW | 21.05.2012
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Apple, Samsung tussle over smartphone patent

The CEOs of Apple and Samsung are holding mediation talks under pressure from a US court. But the two rivals are still locked in extensive litigation with no end in sight.

A comparison of the Apple iPad and the new Samsung Galaxy tablet computer at the IFA trade fair in Berlin in 2010.

Apple and Samsung are locked in litigation over patent infringements

The representatives of two powerful IT companies have been compelled to hold talks this Monday and Tuesday, presided over by a judge in San Francisco. Tim Cook is the CEO of Apple, which, thanks to the iPhone and the iPad, now has the highest market value of any company in the world. Choi Gee-Sung, on the other hand, heads the Korean concern Samsung Electronics, which now sells more mobile phones than any other company – and, even more importantly, more smartphones than Apple.

For over a year now the two companies have been battling it out in court. Apple accuses Samsung of shamelessly copying its products, thereby infringing its patents. Samsung has responded with counterclaims. According to Florian Müller, who has been analyzing patent disputes in the industry since the beginning of 2010 on his blog fosspatents.com, more than 50 lawsuits have been filed in ten countries. “Some of these lawsuits have been split up into several different suits,” he points out, “so the total number could easily be closer to 100 than 50.”

Florian Müller also advises IT companies like Microsoft and Oracle, but states that he has no business dealings with either Apple or Samsung. He doesn't believe that Apple and Samsung will reach an agreement this week in San Francisco. “Both parties only agreed [to the meeting] in order not to appear uncooperative and unconstructive in the eyes of the judge. That's not a good basis from which to reach an agreement on content,” he comments.

iOS versus Android

The late CEO of Apple, Steve Jobs, holds up an Apple iPhone at the MacWorld Conference in San Francisco, on Jan. 9, 2007.

Former Apple CEO Steve Jobs launched the first iPhone in 2007

Apple launched the first iPhone in early 2007. It was a device that was to fundamentally change the world of mobile communications. The iPad tablet computer followed in 2010. Both products were phenomenally successful. To date Apple has sold some 220 million iPhones and almost 70 million iPads. With a market value of more than $500 billion, Apple is currently the most valuable company in the world.

Mobile phones with Internet access have been around for a while, as have tablet computers. Apple's achievement consisted primarily of having made these devices easy to use, and thus suitable for the mass market, by way of its iOS software.

Two years after the first iPhone, the Internet company Google then launched Android – an operating system whose user interface is very close to Apple's iOS. Furthermore, Android works on mobile phones from numerous different manufacturers. It quickly became very successful. According to calculations by the US market research company Gartner, in the first quarter of this year Android had a worldwide market share of 56 percent, against 23 percent for Apple.

'Thermonuclear war'

The late, former Apple CEO Steve Jobs loathed Android. For him, it was the most flagrant example of the copying of an Apple invention. His biographer, Walter Isaacson, quoted Jobs as saying, “I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this.”

Tim Cook, who took over the leadership of Apple after Steve Jobs' death, is less belligerent. Cook said in April that he has always hated litigation. “We just want people to invent their own stuff,” he said. “If we could get to some kind of arrangement where we could be assured that's the case, and a fair settlement on the stuff that's occurred, I would highly prefer to settle versus battle. But the key thing is that it's very important that Apple not become the developer for the world.”

Analyst Florian Müller does not see the new Apple boss's statements as indicating any fundamental change in company policy. “If Tim Cook had said, ‘We agree to our inventions being imitated by others, we just want to be paid for it,' then we would now be at a point where the two CEOs and their lawyers would just have to talk about money. But that is precisely what Tim Cook did not say.”

The current CEO of Apple, Tim Cook, during a presentation

Current Apple CEO Tim Cook: "We just want people to invent their own stuff"

Samsung is overtaking Apple

So there is at present no end to the litigation in sight. For Apple, in particular, there's a huge amount at stake. According to Gartner, in the first quarter of this year Samsung's smartphone sales overtook those of Apple. Samsung sold 38 million Android mobiles, Apple 35 million iPhones.

In their report, the market researchers also establish that, increasingly, smartphones are becoming standard products. The analysis comments that only “at the high end, hardware features coupled with applications and services are helping differentiation”. It is this differentiation that Apple intends to defend in court. The lawsuits are mostly concerned with details: a design similarity here, a navigational program element there. However, the end result – or so Apple hopes – would be for Android smartphones and tablets to look and feel different from Apple products, and also to function differently.

Existential threat

Florian Müller says that, for Apple, this is a battle for its very survival, because network effects play a major role in the fast-moving IT world. “Network effect, put simply, means that when a platform is popular it becomes even more popular over time,” Müller explains. “That's why Android is an existential threat for Apple – however unlikely that may seem when you look at the current figures.”

In the last quarter, Apple made a profit of around $12 million, and it is currently sitting on a $110 billion fortune. But the company knows from its own experience how quickly the tables can turn in the IT business. In 1983, Apple launched the first-ever personal computer to use a mouse and a graphical user interface. By the mid-1990s, Apple was almost bankrupt - and Microsoft was riding high, on the back of a new system called Windows.

Author: Andreas Becker / cc
Editor: Gregg Benzow

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