Samsung CEO to Call Apple's Cook for One Last Settlement Chance
August 20, 2012 4:11 PM
A trial could deeply hurt the pair's relationship, regardless of the outcome
Samsung Electronics Comp., Ltd.'s (
) and Apple, Inc. (
) will have one final talk before they take their case before a federal court jury in the United States, in
a war that could limit U.S. consumer selection
or grant artificial dominance in the smartphone market.
I. A Bitter Battle
world's largest display manufacturer
and a top maker of DRAM, NAND, and mobile CPUs, Samsung is vitally important to Apple. Samsung makes the system-on-a-chip (SoC) brains
inside every iPad and iPhone
Yet in 2010, growing competition between the pair in the tablet and smartphone space prompted late Apple CEO Steve Jobs to
of "slavishly copying" his company's devices, filing suit in
U.S. District Court for the Northern District of California
shortly thereafter, and the war was on.
The court battle has been fierce.
Judge Koh has admonished both sides in the case, at times. [Image Source: IB Times]
Judge Lucy Koh
admonished Apple's lawyers
for belligerent filings, while earlier chastising Samsung from
destroying potential evidence
The case currently dangles in the realm of subjectivity.
While emails and internal documents demonstrate that Samsung was indeed
looking to imitate traits
of Apple's highly successful star tablet/smartphone, Apple was
shown to borrow ideas
for those devices from Samsung, Sony Corp. (
), and other players who predated its market entry.
There are some visual similarities between Samsung's original Galaxy S smartphone and the iPhone -- likewise for iPad and Galaxy Tab. There are also noticeable differences.
At the end of the day much of Apple's design claims boil down to its assertion that it
"owns" exclusive rights to produce rectangular tablets/smartphones
with rounded edges. Apple claims that
may be sufficiently different from the iPad/iPhone to escape design infringement, but its design experts have
struggled to quantify
discrete details of how Samsung and others can escape design infringement.
II. One Last Effort at Peace
Amidst this backdrop Samsung CEO Kwon Oh-hyun will call Apple CEO Tim Cook, in a final chance at settlement before the trial heads to the jury for a verdict.
Apple CEO Tim Cook (left) and Samsung CEO Kwon Oh-hyun (right) will have one last attempt to make peace. [Image Source: Reuters (left); Bug.hr (right)]
At stake in the battle is the $219.1B (valuation by Bloomberg) smartphone market. Combined with the tablet sector, these two markets could easily eclipse a trillion dollars in the next several years.
Apple would love to gain a monopoly in the smartphone market, to complement its dominant position in the tablet space. But it has seemed sluggish in advancing the experience of its handheld devices opting for a
slower pace of changes
than Android. As a result Android devices today have many capabilities and hardware advantages that their Apple counterparts do not -- such as larger screens, LTE modems, and near field communications. Those factors have given Android phonemakers approximately 68 percent of the global market at last count [
To counteract that, it’s taken up the sword. Apple is looking for $2.5B-$2.75B USD in infringement damages, as well as multiple sales bans on Samsung product -- a crippling outcome. It is still
pursuing similar terms
in its case against HTC Corp. (
), as well. In the U.S. only Motorola Mobility -- a Google Inc. (
) subsidiary is free from the wrath of Apple, after the pairs legal strife was
"with prejudice" by a federal judge.
III. Samsung Presents Quandary for War-maker Apple
The Samsung case is made unique by two factors.
First, Apple and Samsung are expected to do $12B USD in business in 2012, up 50 percent from the $8B USD in 2011. Without Samsung's chips Apple could not make its products. Fortunately, regardless of the lawsuit outcome, Samsung is contractually obligated to provide those chips to its archrival. But the danger for Apple comes for the future.
If it hurts Samsung too bad, Samsung could retaliate by refusing to renew chip production contracts. And given the level of design expertise employed by Samsung in making the chips -- particularly the SoC -- that could amount to almost a redesign for Apple of its smartphone chips. Further, quality would likely suffer --
initial trial runs with third-party fabs
reportedly did not go well for Apple; it was hard for them to match savvy Samsung's level of chip-making prowess.
Without Samsung, the iPhone could get a lot dumber. [Image Source: Snapguide]
Second, Samsung is the
largest of the Android phonemakers
, and the
only one to approach Apple
in profitability. However, the promise of killing Android's superstar offers powerful motivation in the other direction -- for war.
It was Judge Koh who suggested the second peacemaking effort, with Samsung and later Apple agreeing. The Judge called herself "pathologically optimistic" in her hope that this second round of intimate talks between company chiefs would produce
a different outcome
If it does not, the jury should be in for an arduous trial, as both companies -- after
-- argued that they were unable to further reduce their claims or exhibits. At least one member of the jury has
family members who reportedly hold a significant number of shares of Apple stock
, something Judge Koh said was okay, as the individual themselves would not directly profit off of damaging Samsung and boosting Apple. Still it's hard to imagine that couldn't introduce a certain level of bias in that member's mind.
“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls
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