Now that a jury has handed Apple a billion dollar court victory and slapped Samsung with a guilty verdict, analysts are busy forecasting what the outcome of the landmark patent lawsuit means for the mobile ecosystem. RCR Wireless takes a look at some of the projected winners and losers.
Winners:
Apple shareholders: Whether or not the verdict gives Apple the edge it will need to regain dominance of the smartphone market (and hold onto it in the tablet market), investors see a short-term gain in the court’s ruling. Apple stock shot up more almost 15% Monday morning.
Microsoft: The software giant has made a point of creating smartphones and tablets that are visibly and functionally different from the iDevices. Now as carriers and their customers look for lower-priced alternatives to Apple’s products, the third guest at the mobile device party is looking a lot more interesting.
Nokia: As the flagship manufacturer of Windows phones, the troubled Finnish giant is a clear beneficiary of this setback for Android. Nokia’s shares rose 10% Monday morning.
Mobile software developers: The verdict creates a clear imperative to innovate in mobile software design, creating new challenges and business opportunities for software developers.
Losers:
Consumers: Sad but probably true. Piggybacking on the design and development work done by competitors has helped mobile device makers bring robust products to market at lower prices. Going forward consumers may see higher prices for Android products.
Samsung The Korean conglomerate should be able to take the billion dollar fine in its stride — it earned $5.8 billion in operating profit last quarter alone. But the verdict is likely to depress future sales of mobile devices, including those that were not part of the trial. In particular, the flagship Galaxy S III may now be viewed more as an iPhone copycat and less as the iconic device Samsung hoped it would be. “We believe that Samsung is likely to make software modifications to devices to work around the patented software features in question,” says Piper Jaffray’s Gene Munster. “For devices that infringe on design patents, we believe those devices may no longer be sold in the US; however, it does not appear that newer devices, including the Galaxy SIII are impacted,” says Munster.
U.S. carriers: “Operators are starting to see that sometimes these disputes are causing Android not to have the most elegant solutions,” says Jefferson Wang, wireless practice lead at IBB Consulting. Android devices have been very attractive to carriers because they do not typically carry the subsidies associated with Apple’s products, but analysts say the development work-arounds needed to steer clear of patent disputes can make these products more expensive and less user-friendly. Of course, in the long term that development work may pay off with new Android innovations.
Google Google, of course, is the creator of the Android operating system which was found to be in violation of iOS patents on certain Samsung devices. The company may need to work a bit harder now on its relationships with manufacturers who could jump ship or get on board the Windows boat. And Google’s relationship with Apple is in jeopardy as well. “The whole episode is a reminder that the AAPL/GOOG relationship is likely permanently damaged and highlights our concern on how it will impact GOOG’s advertising opportunities on Apple products,” says Kevin Smithen of Macquarie Securities.
Full disclosure: The author owns shares of Nokia.
