Greg's Bite: Samsung and Android Lose, Big Time
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Greg's Bite: Samsung and Android Lose, Big Time

By Greg Mills

Steve Jobs anticipated the eventual copy cat problem, should the iPhone and iPad be successful. I really don't think anyone at Apple knew at launch just how successful the new platform would become. Jobs gave fair warning at the launch of the first iPhone that Apple had patented the phone and software lavishly with numerous patents. The competition panned iPhone, but also began to reverse engineer the device.

Google had a head start developing the Android OS since their CEO was on the board of Apple. Steve Jobs had been vilified for not trusting people in various writings about his life. When you consider the crown jewels of technology that have been stolen right from under his nose, a lot can be excused. It is not paranoid to think you can't trust outsiders with your trade secret, but simply good business sense to work in absolute secrecy when you have been burned before by those who call themselves friends.

Steve Jobs and Eric Schmidt were famously observed sitting at a coffee shop table "discussing" something that seemed to have Jobs upset. It turns out Apple had found out that Google had used inside information to jump start what would become Android. Jobs, not lacking a sense of outrage and able to express himself colorfully, declared the Android OS a stolen product and vowed to go to "thermonuclear war" to stop it. He didn't live long enough to see the slow motion effect of those patents and lawsuits, but if he is looking down on the situation from beyond the grave, he must be satisfied that some justice is being wrought.

Having been through the process of obtaining US patents, the time it takes get them issued and the costs to enforce them are breathtaking. When your company is the most valuable company in the world you can hire the best attorneys and do all the right things to enforce your patent rights to the fullest extent of the law.

That last phrase of the proceeding paragraph is the kicker. In electronic technology, the pendency period for obtaining patents is so long, by the time you can get a patent through the process to issue, the underlying technology is often obsolete.

When the iPhone made everyone else's cell phones into dumb phones and Apple's iPhone the smart phone, the competition had a problem figuring out just what was patented, patentable and unpatentable by Apple. Google is always smug in its confidence that it can pretty much do as it wants with government agencies, patents and ethics since they also have an army of lawyers. For example, they used unlicensed Java code and the Apple iOS to fashion Android and won when Oracle sued them. Apple decided to sue Android handset makers rather than Google directly, but the effect on the Android platform is the same.

As Apple put it in closing remarks in the recent trial, what took Apple four years of R&D to create, took Samsung only 90 days to steal. So you end up with a stolen hardware design that runs a stolen software platform. Apple was absolutely right to have gone ballistic.

Since Microsoft R&D was comatose, the iPhone caught them completely flatfooted. Had Microsoft had a spy on the Apple board of directors as Google did, the Windows OS might have come out years sooner. Microsoft also suffered from the delusion that since the iOS and touch screen tablet had eluded them, not to worry, Apple couldn't do it either. Whoops .... the Post PC era is upon us and Microsoft is going to see the Windows PC OS steadily decline as the mobile computing sector Apple invented is revolutionizing the industry. The famous rounding error Steve Balmer noted has become far more significant.

What will the future hold as the legal fight over the iOS, iPhone and iPad technology continues to unfold?

1. The major win Friday, with a Federal Jury declaring Samsung an intentional technology thief will certainly color legal actions between Samsung and Apple around the world.

2. Look for further lawsuits against Samsung as Apple flies additional suits over additional new patents that are even more fundamental to the Android OS.

3. Look for injunctions and trade embargos that will take numerous Samsung phones off the market in the US and elsewhere.

4. Expect Google to dumb down the Android OS to exclude Apple's patented touch screen gestures and button designs.

5. HTC, Motorola and the other Android phone makers are surely shaking in their boots as the law suits filed against all of them now appear far more threatening.

6. I think the smartphone market will be changed due to all the above, as Apple regains the market segment stolen by the Android gang.

7. Expect innovation from Apple such as a finger print sensor built into the home button on coming iPhones and iPad to further enhance security of those devices for business adoption.

8. Apple is on a roll and licensing older iOS technology may be on the table soon. Licensing is far cheaper and more predictable income than court cases.

The judgement against Samsung will cost them roughly $45 per Samsung phone they sold based upon Apple technology. Since Android phones are often sold pretty cheaply compared to iPhone, the margin on Android phones is pretty low already. The jury ruling that Samsung's infringement was intentional carries treble damages, the penalty against Samsung could reach $135 per phone. Damages like that are pretty much clear profit for Apple. Suddenly the Android OS platform is looking pretty grim.

That is Greg's Bite.


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