So, if you usually earn 100 million on a product.
I violate patents, copy your product, sell it with a price 2 times lower than you (because I saved on R&D, and because I am satisfied with lower margin). I earn 25 million. But since my product is so cheap compared to yours, consumers chose my product over yours. You earn 25 million.
You lost 75 million, because I lured customers to give 25 millions to me instead.
Now as per your logic, you agree that I pay you only 25 millions, and other 50 million (damages) you lost - you just fine with it.
I love you dude. What is the next product of yours would you recommend to me to copy?
In your scenario, you didn't come out ahead, so there's no advantage to you.
That ignores one of the biggest problems of Samsung's theft. Let's say that the court takes away 100% of their profits on infringing devices for the past 2 years. They would still be far ahead of the game because:
1. Having copies of Apple's phone helps them to sell other phones.
2. They have gained massive amounts of market share due to their theft and will probably retain a large part of that even after they stop making infringing products.
3. They gained a great deal of R&D without spending a penny. That R&D is useful on other products.
4. Even if the court takes away their profits, selling these phones absorbs some overhead, so it makes other products more profitable. (This is why Apple's calculation of gross profits is more valid than Samsung's calculation of net profits).
Or so it seems. Apple is upfront on on its financials than anyone else. We don't know how much it costs Samsung to manufacture a device versus how much they sell it for?
Admittedly, I am guessing that for example it costs Apple less to make the iPhone 4S (retail: $649) than it does Samsung to make the Galaxy SIII (retail: $599) just because of the beefier (quad core SoC) hardware in the SIII. Apple consistently manages to get as good or better performance from cheaper/older tech.
Admittedly, I am guessing that for example it costs Apple less to make the iPhone 4S (retail: $649) than it does Samsung to make the Galaxy SIII (retail: $599) just because of the beefier (quad core SoC) hardware in the SIII. Apple consistently manages to get as good or better performance from cheaper/older tech.
There's more to it than that. Apple's supply chain is extraordinarily efficient, keeping costs low.
In addition, Apple releases new models once a year and then sells tens of millions. Even Samsung's best-selling model doesn't have the volume of the iPhone and when you add in all their other dozens of models, the average production run is even lower. That costs money.
Apple's inventory management is superb - with only a few days' inventory. Samsung's presumably greater inventory (since Apple has been widely reported as having the greatest inventory turns in the industry) costs money not only in terms of carrying cost, but also storage and waste (some of those will eventually not be sold or sold at reduced price).
Working the other direction is the screen. Apple's screen is considerably better and probably costs more. OTOH, Apple doesn't yet have LTE chips in their phone and some Samsung models do.
All of those things are reasons why a simple back-of-the-envelope calculation is meaningless. It really requires a detailed evaluation.
So Samsung is now saying they should only be liable for $519 million and Apple should pay $422 million leaving them just $97 million down.
The standard 'let's just call it even' tactic. No way Samsung, you owe $2.5 billion and Apples owes you $0.
Not quite true.
It is pretty widely recognized that Apple may owe Samsung some money for licensing of the FRAND patents. They can reduce the amount owed by arguing patent exhaustion, but there's very little doubt that Apple will owe SOMETHING for the FRAND patents - but only a fraction of what Samsung is asking. I would guess that it's more along the lines of perhaps tens of millions of dollars that can be subtracted from the $2.5 B penalty (possible tripled if the jury believes that the infringement was willful - which seems quite plausible).
So Samsung is now saying they should only be liable for $519 million and Apple should pay $422 million leaving them just $97 million down.
The standard 'let's just call it even' tactic. No way Samsung, you owe $2.5 billion and Apples owes you $0.
Marvin you allow your imagination to run rampant at times. What I've mentioned before is that these aren't emotionally governed issues, and the full numbers are sum totals of estimates. They aren't valid unless the math behind them can be backed up, meaning that each of these patent claims on either side has been presented as a unique claim in itself contributing to a total. The lost sales estimate is another point which can be argued. I don't get how you come to your conclusions at times.
Oh, so you don't disagree that they do owe more, just with our numbers (which, admittedly, I'm pulling out of thin air)?
I'm really more neutral than you seem to think. I'm much more interested is in Apple's activities than Samsung's, yet I'm not emotionally tied to the brand. I don't claim to have read every bit of case material. There's really no reason to read into my words for hidden sub-context. On whatever allegations stick, they'll see a specific amount pending appeals assuming there is no settlement. If a patent is considered invalid on either side, it won't be considered in such an amount. This will likely wrap up much faster if it goes to settlement. Otherwise you're likely to see appeals, especially if the jury sides with Apple on every matter, and the calculated damages are anything approaching Apple's requested total.
… I'm just curious on which side of the fence you fall about the amount of damages. Nothing more.
I doubt you'll be pleased by the end result of this. If you look at how many claims Apple made just seeing what would stick, it's unlikely that the end figure will resemble what they requested assuming they win both the trial and resulting appeals process. We will see. It also remains to be seen what happens with samsung's counter claims. Remember there are still other legal battles between the two outside the US.
Comments
In your scenario, you didn't come out ahead, so there's no advantage to you.
That ignores one of the biggest problems of Samsung's theft. Let's say that the court takes away 100% of their profits on infringing devices for the past 2 years. They would still be far ahead of the game because:
1. Having copies of Apple's phone helps them to sell other phones.
2. They have gained massive amounts of market share due to their theft and will probably retain a large part of that even after they stop making infringing products.
3. They gained a great deal of R&D without spending a penny. That R&D is useful on other products.
4. Even if the court takes away their profits, selling these phones absorbs some overhead, so it makes other products more profitable. (This is why Apple's calculation of gross profits is more valid than Samsung's calculation of net profits).
Quote:
Originally Posted by dasanman69
Or so it seems. Apple is upfront on on its financials than anyone else. We don't know how much it costs Samsung to manufacture a device versus how much they sell it for?
Admittedly, I am guessing that for example it costs Apple less to make the iPhone 4S (retail: $649) than it does Samsung to make the Galaxy SIII (retail: $599) just because of the beefier (quad core SoC) hardware in the SIII. Apple consistently manages to get as good or better performance from cheaper/older tech.
There's more to it than that. Apple's supply chain is extraordinarily efficient, keeping costs low.
In addition, Apple releases new models once a year and then sells tens of millions. Even Samsung's best-selling model doesn't have the volume of the iPhone and when you add in all their other dozens of models, the average production run is even lower. That costs money.
Apple's inventory management is superb - with only a few days' inventory. Samsung's presumably greater inventory (since Apple has been widely reported as having the greatest inventory turns in the industry) costs money not only in terms of carrying cost, but also storage and waste (some of those will eventually not be sold or sold at reduced price).
Working the other direction is the screen. Apple's screen is considerably better and probably costs more. OTOH, Apple doesn't yet have LTE chips in their phone and some Samsung models do.
All of those things are reasons why a simple back-of-the-envelope calculation is meaningless. It really requires a detailed evaluation.
The standard 'let's just call it even' tactic. No way Samsung, you owe $2.5 billion and Apples owes you $0.
Not quite true.
It is pretty widely recognized that Apple may owe Samsung some money for licensing of the FRAND patents. They can reduce the amount owed by arguing patent exhaustion, but there's very little doubt that Apple will owe SOMETHING for the FRAND patents - but only a fraction of what Samsung is asking. I would guess that it's more along the lines of perhaps tens of millions of dollars that can be subtracted from the $2.5 B penalty (possible tripled if the jury believes that the infringement was willful - which seems quite plausible).
Quote:
Originally Posted by Marvin
So Samsung is now saying they should only be liable for $519 million and Apple should pay $422 million leaving them just $97 million down.
The standard 'let's just call it even' tactic. No way Samsung, you owe $2.5 billion and Apples owes you $0.
Marvin you allow your imagination to run rampant at times. What I've mentioned before is that these aren't emotionally governed issues, and the full numbers are sum totals of estimates. They aren't valid unless the math behind them can be backed up, meaning that each of these patent claims on either side has been presented as a unique claim in itself contributing to a total. The lost sales estimate is another point which can be argued. I don't get how you come to your conclusions at times.
Originally Posted by Marvin
The standard 'let's just call it even' tactic. No way Samsung, you owe $25 billion and Apples owes you $0.
Imagination, nothing. This is what they owe.
Quote:
Originally Posted by Tallest Skil
Imagination, nothing. This is what they owe.
This is the problem. Neither of you has any math. You're just looking for something that sounds good.
Originally Posted by hmm
This is the problem. Neither of you has any math. You're just looking for something that sounds good.
Oh, so you don't disagree that they do owe more, just with our numbers (which, admittedly, I'm pulling out of thin air)?
Quote:
Originally Posted by Tallest Skil
Oh, so you don't disagree that they do owe more, just with our numbers (which, admittedly, I'm pulling out of thin air)?
I'm really more neutral than you seem to think. I'm much more interested is in Apple's activities than Samsung's, yet I'm not emotionally tied to the brand. I don't claim to have read every bit of case material. There's really no reason to read into my words for hidden sub-context. On whatever allegations stick, they'll see a specific amount pending appeals assuming there is no settlement. If a patent is considered invalid on either side, it won't be considered in such an amount. This will likely wrap up much faster if it goes to settlement. Otherwise you're likely to see appeals, especially if the jury sides with Apple on every matter, and the calculated damages are anything approaching Apple's requested total.
Originally Posted by hmm
There's really no reason to read into my words for hidden sub-context.
… I'm just curious on which side of the fence you fall about the amount of damages. Nothing more.
Quote:
Originally Posted by Tallest Skil
… I'm just curious on which side of the fence you fall about the amount of damages. Nothing more.
I doubt you'll be pleased by the end result of this. If you look at how many claims Apple made just seeing what would stick, it's unlikely that the end figure will resemble what they requested assuming they win both the trial and resulting appeals process. We will see. It also remains to be seen what happens with samsung's counter claims. Remember there are still other legal battles between the two outside the US.
$2B is a big ouch for Samsung, but affordable. $2B means nothing to Apple. For both sides, it's about principles and face.