Apple could collect $10 for every Android device sold, expert says

Posted:
in iPhone edited January 2014
If Apple were to abandon its lawsuits against Android smartphone manufacturers and instead negotiate licensing fees for its patented technology, one expert believes Apple could collect $10 for each Android device sold.



Kevin Rivette, managing partner at intellectual property firm 3LP Advisors LLC, said in an interview with Bloomberg that he believes Apple could probably collect up to $10 in royalties for every Android device sold. That would be twice the $5 per unit Microsoft is believed to receive for each HTC Android device sold.



But Apple Chief Executive Steve Jobs indicated before he died to biographer Walter Isaacson that he had no interest in licensing Apple's patented technology to Android manufacturers. Jobs said he believed Android was a "stolen product," and indicated he was "willing to go thermonuclear war" to stop it.



That aggressive approach could be detrimental to Apple shareholders, Rivette believes, because it is prompting device makers to modify their infringing products and work around Apple's intellectual property. Instead, Rivette thinks Apple should reach settlements in cases where it can't win import restrictions against competing devices.



"A scorched-earth strategy is bad news because it doesn't optimize the value of their patents -- because people will get around them," Rivette told Bloomberg.



"It's like a dam. Using their patents to keep rivals out is like putting rocks in a stream. The stream is going to find a way around. Wouldn't it be better to direct where the water goes?"



Evidence of how Android smartphone makers will work around Apple's intellectual property has come in a few cases already. Earlier this month, the U.S. International Trade Commission found that HTC was in violation of an Apple patent related to "Data Detectors," but only a day later HTC said it was testing new devices that work around Apple's patent. As a result, the ITC's ruling is not expected to have an immediate impact on either HTC or Apple.







Similarly, after Apple found legal success with its patented iPhone and iPad designs in Germany, Samsung opted to redesign its Galaxy Tab 10.1 tablet with thicker edges and speakers that accompany the front screen. With those changes, it is not expected that Apple will win a ban on sales of the Galaxy Tab 10.1N in Germany.



While Apple has opted to sue, Microsoft has forged licensing agreements with more than half of Android device makers. The Redmond, Wash., software giant has agreements in place with Samsung, HTC, Acer and Viewsonic, while lawsuits against Motorola Mobility, Barnes & Noble and others continue.
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Comments

  • Reply 1 of 217
    Or Apple sticks to their guns, wins, and collects $10 in damages per device AND keeps the tech only at Apple like Steve wanted
  • Reply 2 of 217
    solipsismxsolipsismx Posts: 19,566member
    With a reported 700,000 activations per day average that is 63,000,000 per quarter which is $630,000,000 in profit for Apple. If we figure 30M iPhones and 15M iPads with an average sale price of $630 we get $28.350B which means $5.67B in net profits if we consider 20%.



    So why is Apple suing over licensing if we're talking about billions per year in profit? Does this legitimize the thievery? Would Samsung have licensed from Apple all the trademarks and patents they stole or would Apple have been laughed at when trying to ink deals from vendors?
  • Reply 3 of 217
    The stream analogy is an interesting one, but again, it depends if Apple really wants to license it's tech as a policy of revenue enhancement. For a company like IBM, part of their business strategy is to license the tech to all comers for research borne from their labs...regardless if it is used by competitors or not. Apple already has a ton of money and can't really be bought. The law states that a patent holder doesn't have to license the tech to anyone if they don't want to.
  • Reply 4 of 217
    Pass the parcel may suit Apple who obviously may have to pay $10 per iDevice too.



    $10 ain't a lot compared to the near $600+ they get per iSmart user.
  • Reply 5 of 217
    Works for Microsoft, why not?
  • Reply 6 of 217
    ivladivlad Posts: 739member
    Apple is a corporation, and according to US: corporations are people. So would people go to war with each other over dumb things? HEEELLLSSS YEAAAHH!
  • Reply 7 of 217
    wingswings Posts: 261member
    Or ... Apple continues on its present course and wins a few more usability patent infringement cases, where Android has to come up with an alternate method which doesn't work as well, or has to drop the feature entirely, then Apple may win over even more Android users. If they win over just one user then they make an additional $200 versus getting $200 by license fees from 20 Android users. So they stand to make more if they can get 5% or more converts (or newcomers who were about to choose Android) by forcing Android to drop features.



    I don't even believe what I'm writing cause I don't think Apple is doing this for the money anyway, as Jobs already stated.
  • Reply 8 of 217
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by aBeliefSystem View Post


    Pass the parcel may suit Apple who obviously may have to pay $10 per iDevice too.



    $10 ain't a lot compared to the near $600+ they get per iSmart user.



    If we compare profits we're talking about ≈$150 to $10. That's still a huge difference and Android OS is not outselling iOS anywhere close to 15:1. In most markets Android OS still appears to be lower than iOS, only besting it when you compare smartphones OSes.
  • Reply 9 of 217
    Quote:
    Originally Posted by Hellacool View Post


    Works for Microsoft, why not?



    Because the day apple follows microsofts business strategy will be a very sad day.
  • Reply 10 of 217
    Quote:
    Originally Posted by charlituna View Post


    Or Apple sticks to their guns, wins, and collects $10 in damages per device AND keeps the tech only at Apple like Steve wanted



    If it was acceptable to have posts containing only "+1", this post would only be "+1".



    Seems to me that they're nowhere near losing this battle. With Oracle's help (via completely unrelated lawsuits), Apple can see Android torn apart.
  • Reply 11 of 217
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by SolipsismX View Post


    With a reported 700,000 activations per day average that is 63,000,000 per quarter which is $630,000,000 in profit for Apple. If we figure 30M iPhones and 15M iPads with an average sale price of $630 we get $28.350B which means $5.67B in net profits if we consider 20%.



    So why is Apple suing over licensing if we're talking about billions per year in profit? Does this legitimize the thievery? Would Samsung have licensed from Apple all the trademarks and patents they stole or would Apple have been laughed at when trying to ink deals from vendors?



    It's a complex issue, as are all issues involving IP. Is Apple's reputation hurting because of all the lawsuits? If so, how much is that worth? Does it cause people to buy Android instead? We don't know, but there could be some fallout.



    The question that really matters here, and one I would hope Apple is considering, is whether their lawsuits will damage Android enough so that some people will decide that it doesn't work as nicely as they would wish, and therefor switch to iOS. But will this happen? Are the reasons people are buying Android more important than a few UI ease of use questions? After all, it's mostly agreed now that Android is cruder and doesn't work quite as well. That hasn't stopped its march.



    With HTC, we see a feature that isn't being "worked around", but removed. Will that removal help Apple, or will people even care? It's a useful feature. It recognizes text such as phone numbers and allows them to be dialed by just tapping on them.



    If people would like that, but not enough to stop them from buying a phone without it, then Apple would be better trying to get a license fee than stopping it. After all, Google put it in, and so they do think people would like it.



    I don't think anyone can answer these questions. They're too subtle. Microsoft is different, they don't make phones (yet), and so are very happy to get license fees, because that's what they do anyway.
  • Reply 12 of 217
    melgrossmelgross Posts: 31,507member
    Quote:
    Originally Posted by SolipsismX View Post


    If we compare profits we're talking about ≈$150 to $10. That's still a huge difference and Android OS is not outselling iOS anywhere close to 15:1. In most markets Android OS still appears to be lower than iOS, only besting it when you compare smartphones OSes.



    But if these suits aren't slowing Android's growth, it would be better for Apple to take a billion a year in addition to the rest of their profits, as Android is continuing to grow.



    Let's not forget that Smartphones are still just a small percentage of the worlds phones. That $600 million now will be $4 billion in a few more years. That ain't chicken feed.
  • Reply 13 of 217
    Quote:
    Originally Posted by Wings View Post


    Or ... Apple continues on its present course and wins a few more usability patent infringement cases, where Android has to come up with an alternate method which doesn't work as well, or has to drop the feature entirely, then Apple may win over even more Android users...



    I don't even believe what I'm writing cause I don't think Apple is doing this for the money anyway, as Jobs already stated.



    This exactissimo.



    Somebody did an interesting analysis a while ago of just ONE of the parents in question. It has to do with the little "bounce" animation that happens when you're scrolling down (or up) a list or a window and reach the of it. Boing! You know.



    The writer's point was -- and Apple's point is -- that they invented this cool thing, and only they should be allowed to use it. I don't know jack about patent law, so I have no opinion about the legal merit of this point of view, but as Wings points out, this isn't about the money. It's about Apple preserving its unique user experience.



    [Wow, autocorrect magically understood whether I wanted "it's" or "its" in each case in the previous sentence. Siri must be having a salutary effect on those pesky algorithms.]



    What Apple wants, apparently, is to force Android designers to drop the bounce, thus making the user experience one tiny degree less cool. Extrapolate this effect over the whole field of patents involved, and I should think it results in a notable downgrade, or at best a tangible lateral shift, in the overall Android UX. Users may not even consciously register this effect on a feature-by-feature level, but they'll get that Android just doesn't feel as good, or as "alive," or (to use a favorite Jobs term) as delightful as the Apple experience.



    It's hard to quantify this. How many billion $USD is "delight" worth? I'd say it's like having slightly better armor on a battlefield. You don't want the opposing generals to pay you for the right to upgrade their tanks. You want your tanks to be better, full stop.
  • Reply 14 of 217
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by charlituna View Post


    Or Apple sticks to their guns, wins, and collects $10 in damages per device AND keeps the tech only at Apple like Steve wanted



    Apple's strategy is 1) a losing one, and 2) doesn't make sense. It is costing Apple millions in attorney fees, years in times, and to date Apple has had little success. Meanwhile, Microsoft is 1) spending little on attorney fees, and 2) is getting a pay day on practically every Android device sold.
  • Reply 15 of 217
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by melgross View Post


    It's a complex issue, as are all issues involving IP. Is Apple's reputation hurting because of all the lawsuits? If so, how much is that worth? Does it cause people to buy Android instead? We don't know, but there could be some fallout.



    Just today Bloomberg issued the first article I've read on the potential fallout from these patents.
    Quote:

    With HTC, we see a feature that isn't being "worked around", but removed. Will that removal help Apple, or will people even care? It's a useful feature. It recognizes text such as phone numbers and allows them to be dialed by just tapping on them.



    I thought HTC had a work around for this and had already implemented it newer devices.





    Quote:
    Originally Posted by melgross View Post


    But if these suits aren't slowing Android's growth, it would be better for Apple to take a billion a year in addition to the rest of their profits, as Android is continuing to grow.



    Let's not forget that Smartphones are still just a small percentage of the worlds phones. That $600 million now will be $4 billion in a few more years. That ain't chicken feed.



    I don't disagree with the money to be had but I do wonder why this golden egg hasn't been sought after. It makes me think it's too good to be true or not in the best interest of Apple's longevity with iOS-based devices in ways I can't imagine.
  • Reply 16 of 217
    mactelmactel Posts: 1,275member
    What makes anyone believe that they haven't already tried to negotiate a licensing fee structure with Google? The lawsuits are the last straw. MS has been going directly to the handset makers to get the licensing fees and maybe Apple has tried too but with no luck.
  • Reply 17 of 217
    nceencee Posts: 836member
    and so they say no, we'll pay you $2.00 maybe $4.00 per device, but that's all. Now the numbers chance a lot?



    Skip
  • Reply 18 of 217
    Quote:
    Originally Posted by Doctor David View Post


    Because the day apple follows microsofts business strategy will be a very sad day.



    Yeah, making money is such a waste.
  • Reply 19 of 217
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Hellacool View Post


    Yeah, making money is such a waste.



    You think MS's business strategy is making money? That's their goal, their strategy for achieving their goal differs in nearly every way from Apple's.
  • Reply 20 of 217
    Quote:
    Originally Posted by SolipsismX View Post


    You think MS's business strategy is making money? That's their goal, their strategy for achieving their goal differs in nearly every way from Apple's.



    And they make a crap load of money.
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