Apple is gunning for Google


At the heart of Apple’s now successful patent court cases against Samsung is not just its desire to protect its iPhone business but a proxy war with Google.
Apple has gone after Samsung more aggressively than any other user of the Android operating system that Google gives to smartphone makers free.

More than a year and about 50 court cases around the world later, the patent war between Apple and Samsung reached a significant point (maybe not the grand finale, given the appeals process) in the most high-profile case, in California. Samsung was fined $1-billion (not the full $2.5-billion Apple was claiming) after the jury found it guilty of “wilfully” copying iPhone and iPad designs

Apple’s victory has produced strident debate about the value of copyright law and will do so for a long time still.

“Apple’s victory over Samsung Electronics last week is really a victory for illegitimate, state-granted monopoly privilege over dynamic, competitive enterprise,” wrote Russell Lamberti, head strategist at ETM Analytics.

“Copying isn’t theft,” he added.

“The world is worse off for the system of intellectual privilege that might directly benefit a privileged few in the short run but unambiguously harms us all in the long run.”

A weary public, still confused by the minutiae of the suit, could be forgiven for wondering: Who cares? But what’s at stake is as much about bragging rights as winning damages.

Apple has a reputation as an innovator that it wants to protect. Apple scored more than a major PR victory. It retained its top-dog innovator status. Steve Jobs told his biographer that he would “go thermonuclear” on Android’s copying of the iPhone. He called the Android system a “stolen product”.

The interesting thing has been how Apple has focused on Samsung though is suing several other manufacturers too. So why?

Perhaps it’s because, of all the other major consumer electronics manufacturers, Samsung is the one that can challenge Apple most strongly.

Sony, the iconic Japanese firm that pioneered what we think of as consumer electronics, is waning, under severe pressure on numerous fronts.

Though it brought the world the first portable music player with the Walkman, Apple took over with the iPod – and has captured the high ground with its other stand-out products, the iPhone and iPad.

Sony last month reported more woeful results, and is struggling to combine the individual strengths of its various businesses in gadgets, TVs, movies and games to create the kind of “the sum of the parts is greater than the whole” monolith that Apple has become.

Samsung, on the other hand, is on the up and up. With Apple, it accounts for 50% of the lucrative smartphone market and gets 90% of its profits from smartphones.

Though the iPhone now brings in a third of Apple’s revenue, Samsung’s mobile division is its biggest money earner.

But, Samsung makes just about all the components that go into modern gizmos and has attained No1 status in most of the product categories it competes in, from smartphones to televisions. Samsung makes an estimated 25% of the iPhone – and, bizarrely, Apple is its biggest customer.

Samsung’s phones, such as the Galaxy S3, might have superior features, bigger screens and cameras.

But Apple still holds the marketing high ground and has that elusive halo effect that pushes its phone and tablet users to buy its computers and spend in the iTunes store.

Apple also has a content and apps ecosystem that cleverly locks its users into iTunes, generating continuous repetitive income, which Samsung doesn’t.

This is round 418 in the patent wars. It’s far from over.

*This column originally appears on Times Live on 3 September 2012


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