Apple will lose the smartphone wars

Apple logo and iPhone © Getty Images
Apple has had its day in the sun

The legal battles surrounding mobile devices, the so-called ‘smartphone patent wars’, are absolutely fascinating.

This week saw Samsung and Apple limbering-up for another US courtroom drama, with Apple claiming to be the great innovator. We’re all supposed to believe that smartphones didn’t exist before they came up with their iPhone. While it’s true Apple came up with a great product, can they really claim a monopoly on rounded corners on a rectangle? Or perhaps a patent on a sliding switch?

I mean, I’ve always enjoyed the beautifully crafted rounded corners on my oak-cased Roberts Radio. And come to think of it, it also had a sliding switch! What gives?

Of course, those in the know tell me there’s much more to it than that, but is there really? It strikes me that Apple is exhibiting the classic symptoms of a monopoly power that’s losing its grip.

The courtroom battle may well be between Apple and Samsung. But be under no illusion, the real battle is between Google and Apple.

And in this battle, I’ve already nailed my colours to the mast. Apple is fighting to maintain its slot as the globe’s top company. But Google is nipping at its heels, and no amount of courtroom drama will keep Apple from being toppled.

This time Samsung has backup

You’ll often hear it said that when it comes to courtroom battles, it’s the guy with the biggest chequebook that wins. And Apple certainly has a fat chequebook.

But it’s not as if Samsung hasn’t got a decent legal team of its own. It has. And I strongly believe that justice prevails in the end. Already it seems Judge Lucy Koh’s Californian courtroom is starting to lose patience with Apple’s monopolistic ambitions.

After all, this isn’t the first time Apple has dragged Samsung into the courtroom. In the first foray, Apple was awarded just shy of $1bn in damages. But in reality, the skirmish was seen as a win for Samsung. The firm was still able to sell its units in the States, and Apple was told to pipe down on most of its claims.

This time round, Samsung is also likely to have Google on its side. The Wall Street Journal reports that Google engineers, including former Android chief Andy Rubin, may testify.

“Google will be a lot more front and centre than in previous cases”, claims Michael Carrier, a patent expert and law professor at Rutgers University in New Jersey. “Google vs Apple makes it more of a clash of the titans on the same turf.”

And don’t forget, Google also has a considerable patent portfolio. A few years back, Google bought Motorola in a deal that netted precious little more than a library of patents. Google later sold the actual phones business at a massive loss.

It seems that this courtroom drama will be a series of claims by Apple, followed by a whole host of counter-claims from Samsung (aided and abetted by Google).


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Apple is turning into a bully

I’ve never been a fan of Apple’s ‘closed-wall’ approach to technology. That is, how it ties users in to its software, hardware and ‘family’ of online products. The business model is based on a monopolistic game-plan. Now, don’t get me wrong, Apple has every right to pursue its business model as it likes.

But public perception is starting to go the wrong way for Apple. Journalists jibe at Apple, suggesting that perhaps French cheesemakers should await court papers from Apple for patent infringement on the rounded corners on a lump of Roquefort!

Nobody likes a bully, and that’s increasingly what Apple looks like.

The fact of the matter is that competition is a delicate balance between innovation and copycat production.

I mean, you only have to look at the fashion industry. The minute a new dress hits the catwalk, the copycats get to work. Next, Primark, you name it. They unapologetically release clone products as soon as they possibly can. That is not to say that these things are Versace or Prada. It’s just that imitation is the best form of flattery – and imitation should be allowed.

Apple is pushing its case too strongly. Now, that may be just my opinion, but there’s evidence that the courts are increasingly taking this opinion too. The courts are getting bored with the patent wars. Increasingly, patents are being used to stifle innovation, rather than enable it. And that’s the complete opposite intention of patents in the first place.

Of course, they’re not the only ones. All the big tech companies play the patent game and suffer patent syndrome. It’s just that Apple is increasingly looking like the giant trying to trample on the rest of the industry.

And as these trials drag through the courts, the battle on the ground continues. And Android devices are winning. What’s more, with hundreds of Android manufacturers competing against each other, there’s no doubt where the genuine innovations are now coming from.

Apple has had its day in the sun. Now all it can do is try to fight to maintain its innovations of yesteryear. And we’re all getting bored with it.

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15 Responses

  1. 04/04/2014, Andrew M wrote

    Apple have successfully locked-in their existing customers. People who bought an iPhone or iPad a couple of years are forced to upgrade to the next iDevice, otherwise they lose all their apps, games, music, films, etc. As they build up their libraries, this lock-in will only increase.

    Regular investors are familiar with the concept of loss-aversion: the reluctance to crystallize a loss. Apple relies on the same psychology to keep people locked in.

    Having said all that, Apple’s share price is already rather high and there’s no obvious scope for further growth or higher margins. They may just turn into a boring dividend-payer rather than a racy high-tech stock.

  2. 07/04/2014, FDJ wrote

    “And Android devices are winning. What’s more, with hundreds of Android manufacturers competing against each other, there’s no doubt where the genuine innovations are now coming from.”

    Hilarious. Apple is INCREASING its market share in the US, Japan and other advanced markets. Android’s growth is coming from cheap phones that replace dumb phones in Third World countries, where they continue to be used as dumb phones. Other than Samsung, none of the “hundreds” of Android manufacturers makes any money, which is a strange definition of “winning”. Even Google makes more money from iOS than it does from Android.

    As for innovation, it was Apple that shipped the first 64 bit chip and Apple that shipped a fingerprint reader that actually works.

  3. 07/04/2014, camholder wrote

    I don’t really understand what your point is. Apple isn’t the only player slapping people with patent suits but point taken, it’s irritating. They do however, still make most of the profits in the mobile phone industry and their sales are still increasing so they are far from dead.

    In reality I don’t want anyone to ‘lose’ the smartphone wars. The healthiest outcome will be 3 or 4 competing platforms that constantly innovate.

  4. 07/04/2014, CT wrote

    You write your articles based on an assumption that technological innovation alone will win out for Google. Yet you ignore a very key point in all this – ease of use. When it comes to the end user, Google’s Android system is miles behind. Furthermore Apples lock in cloud is a brilliant piece of marketing, it works so well for the user that they really wouldn’t want to go anywhere else. So long as Apple keeps delivering the same strong user experience then it’s band of followers will remain keen advocates. Furthermore, this is backed up by Apple never having had huge market share but rather great margins on its products. It’s users know they are getting a great experience and are willing to pay more “a premium” to get it. You need to take your thoughts down to a marketing perspective and consider the end user and their thoughts in all this. You will then find a very different picture. I also hope we end up with 3 or 4+ competing platforms – that will be best for the consumer.

  5. 07/04/2014, humpty wrote

    Actually the real war this year will be Google Vs Oracle over Java (android code). Round 1 went to Google winning in court 2012. Round 2 is Oracle’s appeal and Oracle is the favorite in the Fed.circuits (courts). If Google loses, it’s a boat full of money for Oracle and/or possible takeover of it’s Android business.

  6. 08/04/2014, JDEvolutionist wrote

    Have to admit that my faith is in Apple continuing to do well and I actually like the fact that, justifiably or not, the control Apple has over its products offers better protection for the user base from a significant amount of the downside related to security that I suspect is present in Android products. We have no idea these days what the apps we use do besides the purpose for which we took them on; Apple don’t necessarily get it right but for the moment I sense that there is still some semblance of ethical behaviour within the Apple empire.

    Innovation is not easy but I hope that, in the coming months, Apple will be back to introducing some new innovative products and functionality. I would argue that their approach of not making gimmicky product releases bodes well for some major advances in the future that will be far more likely to keep them ahead of the race and winning than losing.

    I see the recent drop in the Apple share price and yet another opportunity to buy the shares.

    • 14/04/2014, iAmnotasheep wrote

      It is Nokia who benefit most from Android vs IOS. Windows phone is a growing competitor and Nokia X runs android apps. Now Microsoft wants to swallow it so it will be Redmond making decent tech.

  7. 08/04/2014, Justin J wrote

    From the comments above it’s obvious that the Apple customer base is incredibly loyal but also blind. Ease of use….ever tried using itunes on a pc? I’m both an Apple and Android user/customer. ipad vs Nexus, android vs ios….equally good. Due to the business model I believe Android or even a current unknown must inevitably win.

  8. 08/04/2014, AirsideIT wrote

    … meanwhile, Nokia with their Windows based Lumia range and the soon to be released incredible Lumia 930, quietly march on!
    I firmly believe that the behemoth that is Apple will eventually tumble and possibly even, in my opinion, the awful Android OS will take a hit when the Windows phone OS really takes off.

  9. 09/04/2014, IJ1 wrote

    FDJ is spot on, as are many of the comments here. It seems you rely far too much on your personal biases, in this case an intense dislike for Apple, when it comes to dispensing investment advice. This has led to at least two poor calls: one was long samsung / short apple round about when Apple was bottoming out last year i seem to remember; the other long Google / short Apple AFTER Apple fell on poor results. Would be nice, indeed it should be manadatory, if you could tell us how those are getting along. not so well, assuming you actually put them on yourself.

  10. 12/04/2014, Bengt Saelensminde wrote

    Regarding Samsung/Apple, this is what I actually said…

    According to Bloomberg data, Samsung trades on nine times last year’s profits, but looking forward, it’s valued at a mere seven times this year’s prospective profits. If anyone should be buying back their own shares, it’s this lot!

    I don’t know why the stock is rated so low, maybe investors are a little nervous about South Korea’s agitating northern neighbour!

    In any case, I’m not saying you should rush out and buy the shares, nor sell those of Apple.

    Bengt

  11. 19/04/2014, AlastairM wrote

    WHY when I am browsing your site as a paying subscriber do I get unprompted adverts IN MY FACE inviting me to subscribe? Irritating people is bad marketing and your site should not be doing this to subscribers.

  12. 28/04/2014, CT wrote

    Still backing google Bengt after the last few weeks? They have been pretty bumpy to say the least. Here is a recap – missed earnings and the stock took a hit, Business Insider then says Google is weak in search and weak in mobile (http://www.businessinsider.com/what-if-google-is-actually-weak-in-search-2014-4), bad publicity from people like Robert Scoble (once a huge evangelist for Glass) who say Google have made a mess of launching the product, followed by Shishir Mehrotra (the number two guy at YouTube) “quitting”, or was he pushed out in a shakeup. Finally, the exec who runs Google+, a much beloved seven-year veteran of the company, Vic Gundotra, is leaving.

    The company is failing in social media where it simply doesn’t understand online communities and it’s glass product lacks apps for functionality, it has no developers. The search engine’s size means it is loosing out to niche players in the advertising game especially on mobile. They are too diversified, have too much going on in many fields and appear unable to complete the job/get it done. As per a previous comment, they come across too tech driven and lacking in the end user experience – it is their fatal flaw and now the one man who could actually present at the company has left. That means they lack a human face. Are you still long on them after all this?

  13. 22/08/2014, dizpila wrote

    Where are you man? Apple is over the pre-split £700 mark… and it’s just warming up…What’s going on with Samsung? Everything OK with your Samsung?

  14. 12/09/2014, dizpila wrote

    He’s back again… on “Move over Apple – there’s bigger tech news this week” I did not see a single comment about how investors who listened to Bengt lost a lot of money shorting AAPL. Why do you write about stuff you don’t understand? Why? A8 64-bit, M8 processor, iOS 8 breakthroughs in performance, Continuity, etc… all he talks about is Tanzania tech and large screens by Samsung. Listen man, this morning, Apple’s site collapsed because so many where trying to buy tacky large screens from Korea and Tanzania wallets…

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