There has been a lot of attention paid in the digital media lately regarding the ongoing legal fight between hardware makers Apple and Samsung, but make no mistake about it. This upcoming legal battle is really a proxy fight between Apple and Google. Samsung is being sued by Apple for a patent infringement because Apple is saying that the features of Samsung’s handset illegally infringes on Apple’s patents. Samsung’s handsets as you know use the Google Android operating software. If Samsung loses this legal battle with Apple, Google is going to look really, really vulnerable because Apple might possibly turn around and launch a case against Google. The stakes are high in the battle for smart phone operating systems.
As we have reported earlier, Microsoft, normally the 800-pound gorilla in the room, barely registers in the smart phone marketplace. In the world of smart phones, it is really a two-man race between Google’s Android and Apple’s iOS. With that said, it would be very interesting to see how any adverse legal ruling in the Samsung case might impact Google since Google is just producing the software that Samsung runs on its phone hardware. It does not run this software off the shelf. There are some tweaks and configuration changes that Samsung employs. Assuming that the court gains Samsung, which is still up in the air at this point, it would be interesting to see how any modifications by Samsung would insulate, if at all, Google from any legal onslaught launched by Apple.
On the other side of the ledger, if Apple loses, this might be good news for the smart phone industry. Basically this would open the flood gates for cheaper and cheaper smart phone handsets. Viewed from this perspective, this lawsuit might be Apple’s biggest chance to slow down the erosion of its smart phone market share at the hands of Google. Android is a free operating system whereas Apple’s iOS is a proprietary system that only Apple devices can use. As a result, Apple commands a very nice premium for its handsets while Android-powered smart phones have begun a race to the bottom where even before a final legal ruling regarding Android’s look and feel and patent propriety has been handed down, there is already priced pressure as more and more handset makers enter the market.
We suspect that if this case ends up with a defeat for Apple, this would fully vindicate the Google Android OS and bring about full domination, at least from a numerical perspective of Android handsets. Even if Apple wins and Google has to work around Apple, it is still an open question whether such a legal victory would freeze Apple’s current market share or even boost it. If anything, if current market trends persist, we are still looking at complete domination by Android. It is just a question of whether this lawsuit would just be a question of whether it would happen sooner rather than later.
Another key question to ask is whether if Apple loses this case if it can hang on to its brand cachet. Let’s face it. For the privilege of owning a machine or device that has the Apple logo, you are effectively paying easily $100 or more for that privilege. The question is how long will the “cool premium” being paid by Apple device users persists? The perceived value has to be there and so far Apple has done a great job keeping up this perceived value. However, as device prices continue to crash to earth because of the free OS being given out like hot cakes by Google Android, it is just a question of time whether the price gap is so great and the interface improvements of Google adequate enough that it might cut in to the cool premium that Apple is currently charging. These are definitely very weighty questions that industry observers and stock holders of all three companies involved will be keeping an eye on.