Trade Resources Industry Views Samsung Intends to Fight Friday's Landmark Jury Award of $1 Billion to Apple

Samsung Intends to Fight Friday's Landmark Jury Award of $1 Billion to Apple

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 cellphone makers are expected to make changes to future Android smartphone and tablet designs to avoid further patent litigation.

Some analysts suggested Monday that the loss in court could prod Samsung to produce more phones using Microsoft's Windows Phone operating system, instead of Google's Android, which played a key role in Apple's arguments to the jury.

Samsung is expected to appeal Friday's verdict, and it has vowed to fight on in nine other countries where it and Apple have filed more than 50 patent-related lawsuits.

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, which is 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 betting bigger on Windows Phone should not be ruled out," said Ramon Llamas, an analyst at IDC. Samsung also produces phones based on the Bada operating system, but those devices tend to be unpopular in the United States, even though they usually cost less than other smartphones.

Enderle said Samsung might even license WebOS from Hewlett-Packard, or license patents from HP, Nokia and BlackBerry maker Research In Motion. "Expect Samsung to get more creative and be far less trusting of Google," he said.

Florian Mueller, a German writer who pens a blog called Foss Patents, 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 platforms other 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, noting that smartphones whose designs are significantly different from that of the iPhone haven't proved popular. "Radically different designs haven't sold, which is why Samsung [and] Google likely copied Apple in the first place," he said. He added that Samsung will "look at creative ways to get away with their copying going forward."

The biggest problem facing vendors who decide to come up with new designs is the length of time that process might take. Android manufacturers could take longer to bring products to market if they try to develop new designs -- and that would give Apple a window in which it could sell more of its products, analysts agreed.

Morgan Stanley analyst Katy Huberty issued a research note saying that the $1 billion in damages levied on Samsung is a "relatively insignificant" sum, given Apple's $120 billion in cash and investments. However, 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."

Analyst Ben Reitzes at Barclays also said that "competitors might think twice" about how they compete against Apple, and that re-evaluation process would likely slow down their product development cycles and give Apple a chance to sell more of its products. He suggested that if Apple sells 10 million moreiPads and 20 million more iPhones because competitors have to delay product introductions, it would add $17 billion in revenue and more than $5 in earnings per share.

Apple on Monday might ask U.S. District Court Judge Lucy Koh to bar as many as 20 Samsung products from sale in the U.S., but it isn't clear whether such a request would include the latest Galaxy S III or Galaxy Note smartphones and the Galaxy Note 10.1 tablet.

The smartphones that Samsung has produced in the past year, especially the Galaxy S III, have more features that distinguish them from the iPhone than some earlier Samsung smartphones had, 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 [the designs affected by the verdict]," he said, "so the impact will primarily be a financial penalty if it holds up on appeal."

 

 

Source: http://www.computerworld.com/s/article/9230640/Samsung_expected_to_adjust_designs_after_1B_jury_award_to_Apple
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Samsung Expected to Adjust Designs After $1B Jury Award to Apple