Linked by Thom Holwerda on Mon 22nd Oct 2012 13:36 UTC
Legal "One of the exhibits Samsung has now made public tells an interesting tale. It's the slide presentation that Apple showed Samsung when it first tried (and failed) to get Samsung to license Apple's patents prior to the start of litigation. While some of the numbers were earlier reported on when the exhibit was used at trial, the slides themselves provide more data - specifically on the difference between what Apple wanted Samsung to pay for Windows phones and for Android phones. The slides punch huge holes in Apple's FRAND arguments. Apple and Microsoft complain to regulators about FRAND rates being excessive and oppressive at approximately $6 per unit, or 2.4%; but the Apple offer was not only at a much higher rate, it targeted Android in a way that seems deliberately designed to destroy its ability to compete in the marketplace." Eagerly awaiting the 45 paragraph comment explaining how this is completely fair and not hypocritical at all. Bonus points if it includes something about Eric Schmidt being on Apple's board, and, double bonus point if it mentions one of the QWERTY Android prototypes. Mega Epic Bonus if it somehow manages to draw a line from Edison, Tesla, to Jobs.
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Tony Swash
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The mobile phone companies would license each other patents - FRAND or not - to push the industry forward.

Rubbish. All companies do everything they do so as to succeed in business - i.e. make money. Companies can have all sorts of different business models and do all sort of things in particular ways to suit their business model but their business model is designed to do one thing: succeed in business. None are concerned with 'pushing the industry forward' except as a by product of making more money. If they could slow the industry down and make money they would.

The reason that companies such as Samsung or Motorola or Nokia have offered FRAND patents in the past was to make money. It was based on a calculation that showed that going the FRAND route made more money than not going the FRAND route. The basis of those calculations was the low innovation rate business model that prevailed in the handset market before the disruption of the iPhone which caused a rupture with previous market conditions. In the new post-iPhone market conditions offering patented technology within a FRAND framework makes less financial sense, hence companies have slowed FRAND offerings and attempts to agree new FRAND agreements (micro-sim etc) are very fraught.

The old smart phone market conditions were relatively kind to lesser performing companies. The new smart phone market is lethal to lesser performing companies. Currently only two companies have working business models that ensure profitability and scale, and hence survival, in the new global smart phone market, that is Samsung and Apple. All other companies are struggling (with the possible exception of some companies currently restricted to the Chinese market) and almost none will survive in the market.

In this context the struggle between Samsung and Apple will be intense and fought on many fronts. Neither will offer the other anything other than painful licensing terms, both will screw the other for every dollar and every drop of blood, neither are interested in FRAND much anymore. Apple is busy severing every dependency it has on Samsung in it's supply chain and severing every link it can to Google's service stack so it can reduce it's vulnerabilities, it will have completed that process within a couple of years at most.

The previous reordering of the handset and device market post iPhone was only stage one of the disruption, we seem to be entering a new period now where players such as Microsoft and Google and Amazon realise that they have to mimic Apple's business model of making and selling families of integrated devices with integrated eco-systems in order to survive in the modern smart device global market. They won't all succeed. Samsung looks like an odd one out here because it has not, yet, gone with an integrated device service stack model and has continued to ride Google's service stack. That may well change. The relationship between Google and Samsung will be one of the most interesting to watch in the next few years as we discover which is the tail and which is the dog.

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