Who Will Win the Patent War?

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The story about lawsuits regarding patents between mobile industry companies could not be any more complicated. Apple is suing HTC, Samsung and Motorola, while the case against Nokia has been concluded. Now Samsung has responded with a lawsuit against Apple, just like HTC has with Microsoft. Motorola too has countered Apple’s lawsuit and is also being sued by Microsoft, but unlike HTC, Motorola has struck back against Microsoft by starting its own lawsuit.

The View from AbroadLG is being picked on by Sony, while its case against Kodak has ended, but also has a closed case with Samsung. RIM has not yet finalized its mutual lawsuits against Kodak, but the following litigations are still in effect: Huawei vs. ZTE, Oracle vs. Google, Ericsson vs. ZTE, Nokia vs. Qualcomm, Microsoft vs. Barnes & Noble etc.

All of these lawsuits did not start yesterday – the patent war has been going on for years. But it has peaked in the past year since the smartphone market has flared up. It has been given significant telecommunications industry attention because of Google’s recent acquisition of Motorola Mobility. Everyone knows that the greatest value Google has attained for 12.5 billion dollars is Motorola’s patent portfolio, which will give them an incredible arsenal in this conflict.

A New Front in the Smartphone War
The pivotal parties in this war are Apple, Microsoft and Google, while Samsung, HTC, Huawei, Nokia and the others are just collateral victims, involved in the battle only as tactical moves by individual parties. Before an alliance with Motorola, Google has disposed of just 1500 patents regarding smartphones, while Apple had 4000, and Microsoft 17.000.

In a time when Google has 40.1% of the market share of mobile platforms with Android, Apple 26.6% with iOS and Microsoft Windows Phone 7 only 5.8%, it is not the least bit odd that Apple has come down on Google with all available means, as its weak patent portfolio is its most vulnerable segment. It is also not surprising that Google has decided to better prepare itself for future attacks, at any cost. Motorola is one of the mobile telephony market pioneers and has one of the most valuable collection of patents in the world, alongside Nokia and Ericsson.

Among other things, Google has attained a large market share with Android because it offers its platform to manufacturers without charge, while Microsoft charges the license of its Windows Phone 7 operating system. Thus, 550,000 new devices with Android OS are activated daily throughout the world, via a network of 39 products and 230 mobile carriers. Neither Microsoft nor Apple are fond of such a development, and this was the trigger for the lawsuits against HTC and Samsung; a war started over patent breach.

In the European Union, Apple has successfully blocked the sale of Samsung’s Galaxy Tab 10.1 in all countries but the Netherlands for a certain period of time, which was significantly reflected on the number of units sold, while HTC must pay over $40 of royalties for each smartphone it ships with Google’s platform, with the greatest share going to Apple and Microsoft.

Clearly, Apple and Microsoft’s demands regarding the manufacturers who use Android OS are designed to make the devices more expensive, which would slow down the further rise of the Google platform.

Everyone vs. Google
Apple and Microsoft’s war against Google is in the background of all the lawsuits. i.e. the smartphone platform war, in which lawsuits regarding patent breach have become the most lethal of weapons. Google is clearly hoping that it’s purchase of Motorola Mobility will enable the Mountain View giant to use the strategy of its competitors and win a few lawsuits to raise the prices of devices which use Windows Phone 7 and iOS by charging small royalties.

Still, Samsung, HTC, LG, Sony Ericsson and others – all big Android “users” are likely to feel a bit neglected, given that Google has chosen Motorola as its main, in-house device manufacturer. Even worse, some of these companies might be targeted by lawsuits from all sides because they produce smartphones with Android and Windows Phone.

AnalysisIt seems that purchasers will get the short end of the stick because smartphones will be more expensive due to royalties making the production costs higher and higher. The patent war, however, can be useful for the users, as it might result in an more even distribution of market shares when it comes to mobile platforms.

After Google’s acquisition of Motorola, rivals HTC, LG and Samsung might make a more substantial part of their future smartphones with Windows Phone, just to be on the safe side. Microsoft and Nokia want other manufacturers to support their platform in order to raise the bar of its recognizability and expand the developing circle. The acquisition of Motorola will be the catalyst for other companies to reduce their Google dependence during future market challenges, just as it will enable Google a longer survival in the patent war.

The longer the war lasts, the more the market will be leveled out. Despite pointless additional production costs, the final smartphone prices will go down. In this case the purchasers will win the patent war.

About Dragan Petric
For the last fifteen years, Dragan Petric (www.draganpetric.com) has been working as an IT journalist, editor and analyst, with special interests in telecommunication technologies and services. In addition, he authored five books and published over 2,500 articles in many magazines and newspapers in Europe. He has attended about 30 telecommunications and IT congresses around the world and won several journalists awards for his work. 

 

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