Samsung expected to adjust designs after $1bn jury award to Apple
- 27 August, 2012 16:54
Samsung intends to fight Friday's landmark jury award of $1 billion to Apple over smartphone and tablet patent violations -- possibly for years.
But while it fights on, Samsung and other cell phone makers are expected to make changes to future Android smartphone and tablet designs to avoid further patent litigation.
Some analysts suggested Monday that the trial loss could prod Samsung to produce more phones using the Windows Phone OS, instead of Google's Android, which was at the heart of Apple's arguments to the jury.
While Samsung is expected to appeal Friday's verdict, it has vowed to fight on in nine other countries where more than 50 patent-related lawsuits have been filed by both Apple and Samsung.
In coming months, the South Korean manufacturer will continue to produce new designs and concepts, and some may show up in the Galaxy S IV expected to launch in 2013, analysts said.
"Samsung will need to be far more careful with Google, given most of what they got in trouble for seemed to be sourced in Android," said Rob Enderle, an analyst at Enderle Group.
"Samsung is not without its own innovations, so coming up with new approaches to Android or better bigger on Windows Phone should not be ruled out," said Ramon Llamas, an analyst at IDC. Samsung also produces phones based on the Bada OS, but they tend to be lower cost and unpopular in the U.S.
Enderle said Samsung might even license WebOS from Hewlett-Packard, or license patents from HP, Nokia and Research in Motion. "Expect Samsung to get more creative and be far less trusting of Google," he said.
Florian Mueller, author of the Fosspatents blog based in Germany, said Samsung will "definitely keep clear of further design patent infringements that can be avoided, especially since design patent infringement is even more expensive under U.S. law than software patent infringement."
But Mueller noted that Samsung has been "hedging its bets for some time" by supporting other platforms than Android. "Samsung is and will continue to be a multi-platform player," he added.
"Since Google is apparently unable to protect Android, Samsung is certainly going to see a benefit in partnerships with companies like Microsoft and Intel that have stronger patent portfolios and are more careful about avoiding infringements than Google, which has a history of pushing the intellectual property envelope," Mueller added.
Llamas said it is "too early to tell" the long-term impact of the jury's action on overall Samsung designs. But many analysts say there are an almost immeasurable number of ways that engineers can alter designs to avoid patent infringements.
Enderle was an exception, however, saying that radically different designs from the iPhone haven't proved popular. "Radically different designs haven't sold, which is why Samsung/Google likely copied Apple in the first place," he said. He said Samsung will "look at creative ways to get away with their copying going forward."
The biggest problem in making redesigns is how long they might take. Design adjustments by various Android manufacturers could take them longer to bring products to market, giving Apple the ability to sell more of its products, analysts agreed.
Morgan Stanley analyst Katy Huberty issued a note that the $1 billion in damages is "relatively insignificant" given Apple's $120 billion in cash and investments. But she added: "In our view, the bigger win for Apple is the competitive ramifications if other smartphone vendors experience lengthened product cycles and are forced to alter their software and hardware to endure unique designs relative to Apple products."
Ben Reitzes at Barclays also said that "competitors might think twice" about how they compete against Apple, thereby slowing them down while Apple sells more products. He suggested that if Apple sells 10 million more iPads and 20 million more iPhones because competitors are slowed down, it would add $17 billion in revenue and more than $5 in earnings per share.
Apple may ask U.S. District Court Judge Lucy Koh on Monday for as many as 20 Samsung products it wants barred for sale in the U.S., but it isn't clear whether that would include the latest Galaxy S III or Galaxy Note smartphones and the Galaxy Note 10.1 tablet.
The range of smartphones that Samsung has produced in the last year, especially the Galaxy S III, have more distinctions from the iPhone than some earlier Samsung smartphones, analysts noted.
Sun Tae Lee, an analyst at NH Securities and Investment in Seoul, South Korea, said Samsung must make it a priority to stop any injunction against Galaxy S III sales in the U.S. and to avoid any impact on the upcoming Galaxy S IV.
"Apple could demand Samsung stop selling devices," and Samsung would create alternatives, said Jeffrey Kagan, an independent analyst. "I would bet that Samsung is already working hard at just that ...That's why long term I don't see this [jury award] as being a problem for Samsung or Google."
Gene Munster, an analyst at Piper Jaffray offered a similar view. "Net-net, we do not believe Samsung will see any meaningful interruption, likely only minor interruption, in device sales in the U.S.," he said. "We do not believe further settlements [instead of lawsuits] are likely to hamstring Android in any serious way."
Jack Gold, an analyst at J. Gold Associates, said the jury's verdict will apply only to older devices. "I think many of the Samsung phones may have already moved beyond...so the impact will primarily be a financial penalty if it holds up on appeal," he said.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is firstname.lastname@example.org.
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