Late last week, the jury in the Samsung vs. Apple case delivered their verdict. The jury sympathized with Apple’s case for the most part, awarding them $1 billion in damages and validating most of their claims. Samsung, on the other hand, was accused of stealing Apple’s designs and patents on multiple products.
But enough of the verdict already. Let’s step back and look at the big picture here. Did anyone find it strange that Apple and Samsung, whose businesses are heavily intertwined, chose to duke it out in court instead of resolving these issues quietly behind closed doors?
Samsung is a very important partner for Apple. Several key components of the iPhone - flash memory, DRAM memory, application processor, LCD display, touchscreen, etc - came from Samsung since 2007. From the original iPhone in 2007 to the iPhone 4S in 2011, Samsung’s parts has been essential for Apple’s products. In the case of the iPhone 4S, it is estimated that almost half of the final component cost is paid to Samsung. And they’re supposed to be enemies?
If Apple were truly concerned about the fact that Samsung was wrongfully profiting by copying Apple products, they would simply stop working with Samsung. Just consider how much detail bloggers can eke out from leaked components in the next generation iPhone - display size, dimensions, port locations, and more. Apple would've known full well that their partnership with Samsung would give them all the clues they need to prepare competing products. Would you keep providing clues about your next move to your enemies?
Some may say that Apple has no choice but to work with Samsung, since the Korean giant is the biggest parts supplier in town. While it sounds like a valid argument, it simply isn’t true. Just in the processor market, Apple can turn to dozens of suppliers - Texas Instruments, ST-Ericsson, NVIDIA, Broadcom, Freescale, NEC, Toshiba, Mindspeed, etc - for their A4 and A5 chipsets. Any these companies would be ecstatic to have Apple’s business, and will invest in their infrastructure to meet Apple’s demands. In reality, Samsung is a big supplier because of Apple’s business, and Apple can easily find other suppliers if they deemed the damages from Samsung’s copycat products were too big.
Apple loves Samsung, and Samsung loves Apple. It may seem like they are competitors, but Apple and Samsung were in collaboration all along to create a duopoly in the smartphone market. And they've succeeded.
If they are so friendly, why sue each other? Here’s an idea: both companies realized that they would benefit from this lawsuit regardless of the verdict.
For more than a month, Apple vs. Samsung trial dominated the news cycle. Not just tech news - mainstream news as well. Pretty much every news outlet did a blow-by-blow account of the trial through their headlines. Additionally, this trial will be talked about for years to come, and it will be referenced whenever issues of design patents and software patents are brought up.
Apple and Samsung had to pay millions of dollars to lawyers, and Samsung now has to pay $1.04 billion to Apple, but these costs could actually be written off as marketing costs. Sure, $1 billion may be a hefty marketing budget, but considering how much they make every year they can definitely afford it.
In addition, it is likely that Google will help to pay some of Samsung’s legal fees and damages. The firm representing Samsung happens to be representing HTC and Motorola, two of Google’s Android partners, in patent lawsuits with Apple. Although Google does not want to directly confront Apple in the courtroom, they are very much involved behind the scenes. It is in Google’s best interests to keep its Android partners happy, so we can assume that Google is opening its fat wallet to its partners to offset some of the costs from Apple lawsuits.
The timing of the trial coincides with product launch dates from both companies. Samsung has already announced a bunch of new devices this month, and Apple is expected to unveil the next generation iPhone next month. The trial gets people talking about both companies, and that’s the most important thing. The outcome of the trial doesn’t even matter. As a matter of fact, the outcome of the trial has only intensified the emotions and preconceptions that people have for these companies.
Samsung fans and Android fans claim that the American patent system is unfair and antiquated, and that Apple’s patents are too obvious to be considered original. In extreme cases, Android fans’ discontent transforms into straight-up hatred for Apple.
On the other hand, Apple fans believe that the court has recognized Apple’s originality, and that Apple deserves all they will get from this trial.
As you can see, the verdict only adds fire to the fanboyism.
It was revealed during the trial that Apple and Samsung even talked about a licensing deal prior to this lawsuit. Apple offered a blanket licensing deal to Samsung for $30 per smartphone and $40 per tablet. It's an expensive deal, but it isn't far off from similar licensing deals taking place in mobile. Even Judge Koh repeatedly asked two companies why they brought this case to the court instead of signing a deal.
Approximately 98% of all trials settle before it goes to the jury. Why was this lawsuit an exception? Because Apple and Samsung both wanted a grand finale to their ‘thermonuclear war’. They both wanted to put on a show.
If you think the idea of two companies planning a fake lawsuit is ludicrous, Here’s a more palatable idea for you: the decision to go to trial may be a case of inadvertent coordination by the two companies. Even if they didn’t talk to each other, Apple and Samsung may have individually reached the same conclusion that they will profit from this lawsuit regardless of the result.
In any case, this is business as usual. Consumers get fooled, businesses profit.
In fact, Samsung is already reaping in the benefits from this lawsuit as customers are rushing to stores to buy the Galaxy S III. According to Forbes, many stores in the US are sold out of the flagship smartphone from Samsung due to a significant boost of sales following the verdict. Consumers don't care about the verdict at all.
I predict that both Samsung and Apple will have the biggest quarters ever this holiday season, largely thanks to this high-profile trial boosting public interest for the two companies.
Update: We’re not making any serious allegations here. This is pretty much a fan fiction. We love you Apple and Samsung! Please don’t sue us (for real).