Aug 28, 2012

Samsung verdict - Why it is no big deal

The web is full of alarmist and doomsday predictions about the impact of the verdict. Yes, it is a setback, no doubt. But this is not end of the world for Samsung. And we are not talking about '$1 billion? It is 2% of their monthly sales' sort of financial justifications here...

Let us look at them..

The American market is big, but no longer that big

There was a time when Americans checking tyre pressure could save more gas than is consumed in all of China. Not any more.

And it is getting less relevant almost on a daily basis...China is already the biggest smartphone market and brands like Meizu and Lenovo, who dont sell much, if any, in the US are raking in big dollars selling feature laden smart phones that rival the Iphone ...for a substantial discount. Guess what operating system they run on? Android. To a lesser extent, South East Asia, India and other large markets are also huge markets for smart phones and growing at rates a mature market like USA can never match.

The lawsuit only affects phones already obsolete or nearly so

Bit like Toyota forced to stop selling the 2009 Camry.

Samsung's own flag ship S3 as well as newer versions are not affected. At least not by this lawsuit. And Samsung may have been stupid in the past, but they surely would have learnt a lesson, however wrong the lesson is from a moral or legal standpoint.

So all this talk of huge gains for Nokia and Microsoft are complete nonsense. No one is going to visit a phone shop, find no Samsung models and hence end up buying Nokia.

Google is least bothered - just read their press release.

They just survived a far bigger danger - Oracle trying to attack the very core of Android. Compared to that the Samsung case is (even those that go into phone features and not design) about peripheral features that not many will miss even if completely taken out and not just replaced with non-offending versions. Who cares if the icons bounce or they don't?

Android is bigger than smart phones and it is growing..

Remember the old Sun slogan? Java Everywhere..that went nowhere. Well, Google has done it. With Android. There are big global players releasing all sorts of stuff running Android - from motor vehicle dashboards to refrigerators and cameras to even small satellites!

And none of that is going to run Windows or IOS ever! And these companies are not stupid, they have lawyers too and know how to do due diligence.

Time is on Android's side

Remember everyone used to say that 'Apple computers are so easy, my grandmother can use it. Not like Windows'. Well, with all that M$ beat up Apple in the marketplace and drove their stock down to $9. Jobs got fired. And Windows did catch up on features and ease of use and became pervasive.

Same thing may yet happen again. Android is fast closing the gap and is even leapfrogging. There is hardly any popular application left that runs only on IOS. More importantly, Google has no existing fat holy cows to protect. Apple and Microsoft do. For every cheap tablet sold, Microsoft loses a higher value Windows (plus Office which is even more profitable) sales opportunity. With every cheaper 7" tablet sold, Apple loses killer margins on its larger IPAD. But it may be forced to do the same, simply to protect market share and mind share. 

Perhaps that common fear and loathing explains the unusual Apple - Microsoft deal to share IP even though Jobs had said his IP is for Apple to exploit, not to lease out to others.

To be continued..

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