Samsung vs. Apple and#8212; high-stakes, unfinished war

Samsung’s head office in Seoul

Next year may prove crucial in determining winner between technology giants

By Kim Yoo-chul

Patent lawsuits between Samsung Electronics and Apple represent the eagerness of the industry giants to claim larger stakes in a battle for ownership of the technologies behind smart devices such as smartphones.

Embroiled in about 30 patent lawsuits in 10 countries Samsung and its biggest component buyer Apple don’t have any imminent plans to declare a truce anytime soon.

Victory would make it possible to earn

Apple’s head office in Cupertino

billions in royalties in patent licensing and could force the loser to wholly change the way its devices work.

Armed with an untouchable manufacturing base, Samsung has surpassed Apple to become the world’s top smartphone maker, despite getting out the gate rather late.

So far, neither firm has landed a knockout blow.

Samsung chief executive Choi Gee-sung said the South Korean company has already allocated $200 million for the legal fight next year, which the executive believes is ``not that much.’’

``We may see some new lawsuits next year, and at some point there will be fights over the enforceability of some of the upcoming rulings,’’ said Florian Mueller, a patent expert from Germany in an interview with The Korea Times.

Mueller is a consultant who has been chronicling patents in smartphone wars for the past 18 months on his blog and it has become a must-read for industry observers.

``There could be spectacular news from some jurisdictions, such as the United States, where the original lawsuit between the two companies will go to trial in the summer, and Germany, where the companies are already asserting 13 patents against each other, with the first couple of rulings scheduled for the second half of January,’’ said Mueller.

Samsung recently won meaningful victories in the United States and Australia against Apple, while the American firm triumphed in the Netherlands and Germany.

Samsung is also suing Apple over three more patent claims that were filed in April, while Apple has six patent claims lodged against Samsung in Germany.

``The patent battle is going south, however, we should not drop this as it is more about pride,’’ said a top-level Samsung executive by telephone.

Waste of time, little choice

But Mueller claims the companies have wasted a lot of time, money and energy on motions for injunctions, insisting that both of them wanted quick results.

``In 2012, the focus will be on rulings that come down at the end of full-blown main proceedings as opposed to preliminary rulings following fast-track ones,’’ he said.

``Both companies are going to argue that they believe they are winning but the fact of the matter is that they don’t have much of a choice. They need the courts to clarify which of their patents are valid and infringed upon, and which licensing obligations exist with respect to standards-essential patents,’’ he said.

Samsung and Apple have widely divergent views as to the value of each company’s intellectual property and Mueller expects the companies will only be able to settle ``when there’s more clarity about that.’’

According to the independent expert, small victories will add up over time, ensuring that phones with Android operating systems would not look as good or work as well as iPhones.

``I wouldn’t rule out that they may be able to reach a partial agreement on some issues.’’

A recent analysis by YouGov BrandIndex showed Samsung edged past the iPhone in consumer perception in the United States for those over 18.

And this isn’t surprising considering Samsung’s vigorous promotion of its Galaxy devices. ``From a brand awareness point of view the dispute may have been useful to Samsung,’’ according to Mueller.

Need to reduce dependence on Google, MS

It seems reasonable to say Samsung is successfully handling the fight with Apple without any external help but with its own strengths in parts.

An ``absence of Samsung mania,’’ is the biggest concern according to the firm’s executives.

``Samsung owes its recent success largely to Android, and this means people’s eyes are on Andy Rubin when he presents new versions of Android, not on Samsung which then incorporates that software into its devices,’’ Mueller said.

Samsung executives contacted by The Korea Times said the company is on the right track in terms of technology and product roadmaps, however, pessimists say there’s a massive dark cloud on the horizon because many Android fans are going to consider it a natural choice to buy ``Googlerola’’ products in the future.

Horace Dediu, the founder of the mobile industry blog Asymco and independent analyst, asked Samsung to reduce or eliminate its dependence on Google and Microsoft as he believes that the basis of competition in the market today isn’t for hardware.

``The difficult problem for Samsung is that their brand is not associated with this combined solution. Samsung does not `mean’ anything. Apple means a lot for many people. Apple’s loyalty comes from having earned the trust of many users. Everything Apple does comes from the need to establish this trust,’’ the analyst said.

``What Samsung needs to do is to build a loyal set of developers offering unique solutions on top of its platform. When that happens, then Samsung will mean something. It will be a brand that can be `hired’ by the user to do things in their life. Apple is hired to do `things,’ Samsung is the name on a product.’’

Samsung Electronics is still at an infant stage in developing its own software system called Bada. Samsung is investing money that’s been earned from the sale of its Android-based phones to create its own mobile platform. Progress has been insignificant as yet.

To calm mounting worries about Google’s acquisition of Motorola Mobility, Google Chairman Eric Schmidt said that his firm won’t implement any discriminatory measures against Samsung in offering and providing the latest mobile platforms.

``Samsung is vulnerable and this isn’t good in the world of software. Today’s success doesn’t guarantee future success. Samsung should recognize this,’’ said an official from Google, asking not to be identified.

Samsung’s strength in products is based on variety and the ability to manufacture goods on time. Dediu agreed by saying it has an ``enormous collection of products.’’

He went on to say: ``this shows that the company values a portfolio approach versus a target approach. The increase in options may seem to be a good thing but it creates confusion, dilution of brand and increased costs.

``Samsung does not seem to have confidence in its ability to choose which products will be successful and which won’t. By building a focused set of products they can position those products on `jobs to be done,’ which will allow Samsung to market more effectively in specific markets,’’ he said.

``For example, the iPod and iPhone are brands separate from Apple. They imply certain things. Samsung has many sub-brands but they don’t specifically mean anything. It’s not just a matter of choosing names, but of building a complete solution behind the name.’’