Apple (NASDAQ:AAPL) has been involved in court battles with more than one of its Google (NASDAQ:GOOG) Android rivals, but according to one analyst, the fight for smartphone dominance may, in fact, be more about software than hardware.
“When people are buying an iPhone versus a Samsung Galaxy S III, they’re implicitly deciding, ‘I want to be on the iOS platform, or I want to be on the Android platform,” Sanford C. Bernstein analyst Toni Sacconaghi told CNBC.com. “So I think the two are very, very linked.”
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This is clear from this week’s patent settlement between Apple and HTC, which has also raised expectations that the iPhone maker will get into a similar agreement with Samsung soon. Apple and HTC have reached a global settlement that will dismiss all ongoing court litigation between the two and start a ten-year license agreement covering patents held by either company. As part of the deal, HTC will pay licensing fees to Apple. A similar deal with Samsung a deal could help Apple feather its bottom line, Sacconaghi said.
While on the face of it Apple is trying to “upend momentum” enjoyed by Samsung’s Galaxy line of smartphones, considering that the Korean company has shipped nearly 200 million units of the device over the last year, the iPhone maker may actually great business from a patent deal. “Apple actually offered $30 to $40 a unit for a royalty settlement,” the analyst said. “So even if it was $10 a unit from Samsung, that could be $2.5 billion in earnings power for Apple, which is certainly not immaterial.”
Sacconaghi has an Outperform rating on Apple stock and an $800 price target.
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