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The Apple Vs Samsung Verdict - Repercussions

There was high excitement over the Apple vs. Samsung lawsuit this week as the battle reached its climax with a US federal jury turning in a decisive verdict in favor of Apple. It had been a monumental task, with the jury having had to deal with a 20 page verdict form that had around 700 specific questions covering every issue at the trial. The form apparently contained a mix of charts, legal language, patent references, and technical jargon. After pouring and deliberating over all the evidence presented, the jury had held that Samsung owed Apple $1.05 billion for copying Apple's intellectual property. Interestingly, on the same day that Samsung lost in the U.S., it partially won a fight in South Korea though the decision seemed to be evenly split between Samsung and Apple. There have been multiple major skirmishes between the two giants in courts in Australia, UK, Germany and other countries while heading into the US courts.

The trial and verdict is obviously a setback to Samsung's global repute. Apart from the compensation to be paid to Apple, the decline in stock value and the requirement to make changes in the upcoming gadgets will have a financial cost attached. As the verdict does not apply outside the U.S and doesn't apply to all Samsung devices, Samsung can still manage to hold a relative footing in the smartphone market. However, it is very much likely that consumers may end up paying more for Samsung phones to compensate for royalties that Samsung might need to pay Apple on the sale of each phone.

It's however worth noting that Samsung has already begun innovating by re-inventing some of its features and ensuring a consistent changed user experience. Samsung's latest entrant in the market - Galaxy III - already has a unique design. Samsung is also unveiling the second generation of its popular Galaxy Note phone-cum-tablet (phablet). This illustrates Samsung's drive towards making bold design changes to differentiate from Apple's products. Apparently, Samsung is also working on introducing phones with bendable screens in the near future. Samsung might also distract its energies into phones running Windows Phone OS - as it announced the first Windows Phone 8 smartphone here potentially to try to assert its market leader position in another operating system.

Google's response to the verdict has been that the patent claims being disputed do not relate to the core Android operating system. The verdict, though not directed directly at Google, will surely bring its Android OS into focus. One reason for this could be that Samsung is probably the only globally known successful Android OEM - having had high brand recognition (they already made good TVs, consumer goods), completive prices and availability on many carriers. Even though critics claim that Samsung has brought this on itself, the outcome may be negative to Android's image. Google uses the Android platform to push its search advertisements on the mobile platforms. Google's bottom line could be hit in the long term, if OEMs become risk averse and move away from Android.

The ruling could have an effect on other makers of Android devices and they would need to ensure that their devices are clearly distinguishable from Apple products. Manufacturers differentiate their products by innovating around skins as a mechanism to assert their own brand and providing functionality that can help them gain an advantage in the smartphone market. This is possible because Android is open and customizable and allows manufacturers to innovate around its base platform.  Android backers point out that it is this openness that promotes diversity which allows the customer to potentially have more choices to select from - thus working to the customer's advantage.

There are however a section of Android purists who believe that the original Android experience has to be maintained and that Samsung has had to bear the negative publicity because they chose to deviate and cover up the unique Android experience in favor of looking more like a competitor (The example of Dell, Acer, HP, Lenovo etc. all competing with each other in the PC market despite running stock Windows, without skins). The contention is that the OS should remain original with OEMs competing in terms of hardware and potentially extra apps that they could provide out of the box.

This verdict could also help rejuvenate interest in development of mobile operating systems that have been pushed out of the limelight by Android's dynamic growth. Operating systems like MeeGo, Firefox OS etc. will potentially garner more OEM attention as alternatives to Android.  That will translate into more consumer options. Nokia's new flagship phones with Windows Phone 8 will potentially be stiff competition for Android phones - having looked beyond the Android platform almost entirely. In the US, Nokia might even attract consumer attention to replace the void due to decreased sales of Samsung/Android phones as a result of Apple's pursuit. Windows Phone 8 could emerge as a strong competitor to Android.

The immediate fallout could potentially see Apple gain market share at the expense of Android phones. Per IDC, at the time of the verdict, Apple held 19% of the world's smartphone market as compared to Android phones in various avatars holding 64%. The high price of Apple products had been a damper in this regard.

A colleague at work believes that the jury decision in favor of Apple seems to be thumbs up to companies that spend billions of dollars on research and hiring brilliant researchers and thought leaders to create an environment that incubates and generates innovative and revolutionary ideas. Capital gains made from holding rights over such ideas (at least for some time ) and using it to their business advantage enables such companies to plough in profits back to research that will once again generate revolutionary findings to the end consumers advantage.

There are widely disparate opinions being discussed around this particular verdict and its repercussions. There are interesting debates about what should be allowed to be patented and what should not (natural gestures, user interface features etc.). There are discussions around parallels in other industries - for example, the medical industry and how third world countries could be affected by monopolized pricing of drugs etc.  How things play on from here is anybody's guess. It is however clear that the verdict is likely to have a massive shakeup in smartphone and tablets industry - the hottest technology sector today.

 

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