In the aftermath of Apple's billion-dollar patent victory over Samsung last week, the list of winners and losers extends well beyond the courtroom. Count beleaguered BlackBerry maker Research In Motion and Microsoft — which has partnered with once-dominant Nokia to bring Windows Phone-powered devices to market — among those wearing smiles following the verdict.
Apple's victory gives it an even greater edge over its most serious competitor in the mobile space. The South Korean company had become the world's top smartphone vendor based largely on sales of its Android-based offerings — the very devices at the core of Apple's case against Samsung. The jury agreed with the majority of the California computer maker's claims that Samsung violated its design and usability patents.
Winners, losers, and more lawsuits
Market reaction was swift, and hardly surprising: Apple's shares surged over 12 per cent to another all-time high while investors hammered $12 billion from Samsung's market cap. Google, which created the Android operating system that powers smartphones and tablets from Samsung, HTC, LG and others, saw its share value slip 1.35 per cent as investors absorbed the longer-term reality that an Apple victory over Samsung opens the door to similar lawsuits against other Android handset makers.
What was surprising, however, was market reaction to players not even remotely involved in the case. Microsoft, Nokia and Research In Motion all saw their respective share values advance as investors saw the opportunity inherent in Samsung's stumble. As an industry giant staggers from one of the most significant patent cases ever — the $1.049 billion award alone, while peanuts compared to the $220 billion global mobile market, represents one of the largest patent-related settlements in history — it opens the door to smaller players to take advantage as consumers, businesses and developers consider the alternatives to Android.
The end of the duopoly?
Together, Apple and Samsung have cast a long shadow over the mobile industry. In the first quarter of 2012, research firm Raymond James said the two companies combined for 74 per cent of all mobile revenue. Apple was responsible for 80 per cent of the industry's profit, and Samsung the remaining 20 per cent. By Q2, both companies were responsible for an eye-opening 108 per cent of industry profit — thanks largely to losses at Motorola, Nokia, RIM and Sony. Apple's profit share dropped to 71 per cent - despite it holding only 6.5 per cent global market share — while Samsung's rose to 37 per cent based on 25 per cent global market share.
The potential impact on Samsung, and by extension its Google/Android partner, is significant. The next major milestone in the case, an injunction hearing scheduled for Sept.20, could result in key Samsung devices being pulled off the market. Depending on the outcome of the hearing, Samsung could be forced to delay or redesign products already in the pipeline, or remove certain features from already-sold devices via software update. None of this will force Samsung out of the industry, but combined, they could be enough to destabilize the market leader just long enough for smaller players to take advantage.
A lifeline for RIM?
Perhaps no one is watching Samsung more closely than RIM. As it prepares its BlackBerry 10 platform for a planned Q1 2013 launch, the company could potentially benefit in two ways: First, consumers confused by a compromised Android landscape look for alternatives as their favourite devices disappear from store shelves and/or prices begin to rise. Second, developers, looking for a more lucrative, stable market, seek alternatives, as well.
Developer relations are crucial to RIM's attempts to grow market share for its next-generation platform. The company aims to expand the current baseline between 43,000 and 44,000 developers to 50,000 by early next year. It's wooing them with data that shows developers still make more money coding for RIM.
VisionMobile data pegs average monthly revenue from a BlackBerry app at US$3,853, ahead of iOS (US$3,693) and Android (US$2,735). According to the VisionMobile study, BlackBerry apps are also less expensive to develop and bring to market — an average of $15,181, compared to $27,463 for iOS and $22,637 for Android. As a final carrot, RIM is guaranteeing developers of paid BlackBerry 10 apps they'll make $10,000 per title. If they fall short, the company will cut them a cheque for the difference.
While Samsung isn't about to fold up its tents as a result of the verdict, any interruption in its momentum is good news for smaller players like RIM and Microsoft/Nokia. As consumers consider alternatives to Android, they're now more likely to consider new platforms like BlackBerry 10 and Windows Phone 8. The same kind of thinking plays out in business, where IT decision makers traditionally lean toward the lower-risk alternative. Developers will migrate toward the platform that offers the best profitability and longer-term stability.
None of this guarantees that RIM will magically leapfrog back into the game. But the conditions within which it operates just became a lot more favourable thanks to the Apple/Samsung verdict.
Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. firstname.lastname@example.org