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  (Source: Jason Mick/DailyTech LLC)
Steve Jobs gets his final wish, companies appear ready to fight to the death in court

Apple, Inc. (AAPL) and Samsung Electronics Comp., Ltd.'s (KSC:005930) have made it clear that they're over cooperating and are gearing up for total war.

I. Samsung and Apple's Settlement Talks Collapse

According to a report by The Korea Times, the phone industry's two largest players, and two of the world's largest intellectual property owners, walked away from the settlement table despite the efforts of Magistrate Judge Joseph Spero to encourage their chief executives to work out a compromise.  With settlement talks failed the "nuclear war" will begin with Apple's trial, which is scheduled for July 30.

For Apple and Samsung the cost of battle may be enormous.  Both companies could see their products banned, at least temporarily in certain regions.  Samsung may be forced to abandon billions in chipmaking revenue it takes in from Apple on a yearly basis.

And Apple may be forced to find a new supplier for its smartphone CPUs.  With past trials reportedly not going well, that could mean inferior product and fewer upgrades for the iPhone.

Apple CEO Tim Cook sounded dejected in his company's last financial report, commenting, "I've always hated litigation and I continue to hate it we just want people to invent their own stuff."

Samsung v. Apple
Whoever wins in Samsung and Apple's full-blown court war could have a monopoly on the mobile market. [Image Source: The Telegraph]

But despite the seemingly promising signs early this month of a bilateral agreement to cut the number of patents asserted in the companies' lawsuits against each other, the pair could not reach a cross-licensing agreement, as both handset makers believed the other should be paying it licensing fees.

With Apple scooping up large LCD screens for its iPhone 5 (Samsung is the world's largest display manufacturer), the two companies' mutual business has reportedly ballooned to $12B USD for 2012 (up from $8B USD in 2011), even as the pair's public relationship has appeared to deteriorate drastically.

II. Steve Jobs Gets His Wish -- Full Blown "Nuclear" War With Samsung

But ultimately the two companies' leadership seem to believe they stand more to gain by destroying each other, versus working together.  

Samsung current has a larger slice of the smartphone market -- 29.1 percent compared to Apple's 24.2 percent in Q1 2012.  But Samsung trails Apple in profit, making just $4.45B USD in profit, compared to Apple's $11.6B USD haul.

Samsung girls
Samsung's attractive models beat out Apple in unit sales. [Image Source: Shootspeak]

Both companies control close to two-thirds of sales and 99 percent of mobile profits, and their cases are built on questionable legal foundations from a technical perspective.  Samsung is suing Apple mostly based on wireless standards patents.  But Samsung should be obligated to license those patents to Apple under the "fair, reasonable, and non-discriminatory" (FRAND) rules that govern standards patents.

Samsung is currently under investigation for its questionable discrimination of Apple licensing-wise.

Apple on the other hand, may have a bit of a case against the original Galaxy S, which narrowly mimicked the iPhone 3GS in case appearance and GUI (much more than any other Android).  

iPhone 3GS v. Galaxy S
(Click to enlarge) 
Samsung's TouchWiz version on the Galaxy S (left) presented a near identical interface, visually, to the iPhone 3GS (right). [Image Sources: Slashgear (left); Ubergizmo (right)]

But Apple's case becomes much more tenuous when you consider that Samsung’s newer handsets bear far less similarity in case appearance or GUI to Apple's new handsets.  
 
Still patent disputes are often less about technical merits and more about the persuasive power of a company's pricey legal team.  In that case, “Apple v. Samsung” will be fought by lawyers when it goes to trial this summer in U.S. federal court.

But one thing is certain; the collapse of settlement talks would have greatly pleased the late Apple founder Steve P. Jobs, even if his company ends up losing this war.  He vowed near his time of death to send Apple into full war mode and destroy Android at any cost -- or perish trying.

Steve Jobs
Steven P. Jobs' dying wish of "thermonuclear war" with Android has been fulfilled.

He commented, "I will spend my last dying breath if I need to, and I will spend every penny of Apple's $40 billion in the bank, to right this wrong. I'm going to destroy Android, because it's a stolen product. I'm willing to go thermonuclear war on this."

Well, that "nuclear" war is now almost upon us.

Source: The Korea Times



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Apple has more to lose
By tviceman on 5/24/2012 5:16:19 PM , Rating: 2
Apple would be royally screwed in the short term if Samsung cut them off from their fabs. Samsung can sell their displays to someone else, but Apple would have to find another company with the fab capacity to make both their screens and cpu's, and they would also have to make some engineering changes to their CPU if they do jump ship to a different fab.

Samsung would lose all of Apples business, but it would take Apple around a year to "catch back up" to getting cut off from it's primary supply source for screens and cpu's, which is enough time for Samsung, LG, HTC, and Microsoft to dig into Apple's market share in every segment. Very interesting indeed.




RE: Apple has more to lose
By messele on 5/24/12, Rating: -1
RE: Apple has more to lose
By SunLord on 5/24/2012 6:38:53 PM , Rating: 2
Samsung would have little trouble finding customer to keep there fab at capacity if they lost apple simply because apple would displace capacity at some other fab probably TSMC which would drive customers to Samsung. Though Samsung IBM and Global Foundries are all supposed to be compatible so in theory anyone building for one fab can build at all the rest of them with only minor tweaks but I'm not sure any of them would take the order.


RE: Apple has more to lose
By messele on 5/25/2012 1:59:08 AM , Rating: 2
What if the other component makers built more plants, what if the customer pool shrank because so many are now making a loss because in reality they are struggling to sell goods.

Anybody can chuck any imagined scenario in to the hat, me included, the point is nobody knows.


RE: Apple has more to lose
By tviceman on 5/24/2012 11:20:28 PM , Rating: 1
Samsung would love to lure some of TSMC's customers to their fabs. Apple, being the proprietary company they are, won't share their in-house tech with anyone. But someone like Nvidia or AMD would. There have been reports that Nvidia already taped out and manufactured some tegra test chips at one of Samsung's fabs. I don't think Samsung would have a hard time filling their capacity back up in about the same amount of time it would take Apple to get final silicon working CPU's from another fab.


RE: Apple has more to lose
By Bateluer on 5/26/2012 3:36:42 PM , Rating: 2
Heck, Samsung could utilize their own fab space for Exynos 4412 chips and stick a quad core Exynos in every single Galaxy S and Galaxy Tab model they make. Top to bottom quad core, performance bar would be jerked up higher than it's been in years.


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