What’s Next for Smartphone Industry After Apple’s VICTORY Over Samsung?
Samsung is reeling after a U.S. jury on Friday returned its verdict in a long-running patent case between the South Korean technology giant and the California-based Apple (NASDAQ:AAPL). Samsung shares were down 7 percent this morning in Korean trading after a jury found that Samsung owes Apple just under $1.05 billion in damages.
A U.S. jury ruled late Friday that Samsung’s smartphones violate a number of Apple patents, while also coming to the conclusion that Apple did not violate any of the patents Samsung presented. And because the jury found “willful” infringement, Apple could seek triple the damages.
Samsung’s slide today has less to do with the monetary damages and more to do with concerns over how the ruling will impact Samsung’s ability to continue to compete with Apple in the smartphone and tablet sectors. The verdict — which came less than three days after the jury began deliberations — could lead to an outright sales ban on key Samsung products.
Apple’s victory isn’t just bad news for Samsung, but could present immediate issues for Google (NASDAQ:GOOG) and other companies that, like Samsung, sell Android-based smartphones and tablets. Amazon (NASDAQ:AMZN) uses a modified version of Android for its Kindle products, while smartphone makers like HTC and Google’s own Motorola Mobility also use the software to run their devices.
But the ruling could also be a boon for more than just Apple. Shares in mobile phone maker Nokia (NYSE:NOK) jumped 10 percent on Monday thanks to rival Samsung’s setback. An injunction against Samsung products could boost Nokia phone sales by reducing competition within the smartphone market.
Shares in mobile phone firm Nokia leapt 10 percent on Monday on hopes it can benefit from a setback to rival Samsung, which has lost a high-profile court case to Apple that could lead to an injunction against some of its products.
“In addition to Apple, we name Microsoft and Nokia as the main beneficiaries from this outcome,” said Nordea analyst Sami Sarkamies.
Nokia and its software partner Microsoft (NASDAQ:MSFT) have been struggling to win ground over Samsung’s Android-powered smartphones, which lead the market. Google’s Android is used in around 65 percent of smartphones sold globally, while Samsung is the biggest maker of Android phones.
With its latest Windows Phone software set to launch this fall, and its first line of tablets built in-house expected early next year, the ruling against Samsung and its timing couldn’t be better for Microsoft, which has struggled to make much of a dent in the mobile market.
“We think that the real winner hear will be Microsoft and the Windows Phone ecosystem,” Nomura analysts said in a note. “As Android and Apple tear each other apart, Microsoft has been waiting in the wings and is in a very good position to move in and entice users to switch from Android to Microsoft, as we have already seen that user loyalty is low” among Android users.
Apple’s battle with Samsung was largely thought to be a proxy fight with Google, and after its victory on Friday, Apple is expected to file more such suits. And with Android being attacked, more smartphone makers might work to diversify their offerings by building Windows-based smartphones in addition to their Android lineups, simply because Microsoft is one of few non-Android alternatives.