Apple's patent win could lead to profitable royalty stream from Android

Posted:
in General Discussion edited January 2014
Apple's patent victory over Samsung could set the stage for a lucrative source of profit for the world's largest company.

Analysts on Wall Street reacted positively to the news that Apple had won its lawsuit against Samsung, proving to a jury that its rival had committed patent infringement. But though Apple was awarded over a billion dollars by the jury, market watchers believe the courtroom win could have ripple effects throughout the smartphone industry that would be in Apple's favor.

Maynard Um with Wells Fargo Securities said in a note to investors on Monday that he believes the royalty revenue stream for Apple as a result of the ruling could be "highly profitable." Apple must still win appeals from Samsung, and would need to be willing to settle future disputes.

Apple calculated that Samsung owed it $250 million in 2010, on estimated sales of 25 million smartphones in 2 million tablets. This year, Samsung sold an estimated 50 million handsets in the second quarter alone, which would result in even greater royalties.

Um estimates that every $250 million in royalty revenue to Apple equals about 20 cents in earnings per share. He has raised his price target range for AAPL stock to between $740 and $760, up from a previous prediction of $640 to $660.

Though the jury awarded Apple $1.05 billion in damages, the final amount could be higher, noted analyst Amit Daryanani with RBC Capital Markets. The number decided upon by the jury is a minimum total, and the eventual award could be greater based on the judge's decision.

Verdict
Sample of the jury's completed 20-page verdict form. | Source: Apple v. Samsung court documents


Beyond Samsung, Daryanani believes the ruling could create more challenges for other smartphone makers who use Google's Android mobile operating system. He believes the decision could prompt both carriers and customers to be apprehensive about using products from Android-based handset makers.

Chris Whitmore of Deutsche Bank said Apple's win was a "major victory" for the iPhone maker. He believes it will either limit Samsung's distribution in the U.S. or handicap its smartphone feature set.

Like Um, Whitmore also believes that Apple could collect a "significant licensing fee" from Samsung for the sale of smartphones.

And Michael Walkley of Canaccord Genuity believes the verdict could lead Samsung to delay near-term product launches, in an effort to design around the patents it has been found guilty of infringing.

"We also believe other Android OEMs, such as HTC, Sony, and LG, will review this patent verdict and potentially alter and delay planned Android smartphones and tablets," he wrote in a note to investors Monday.

While other analysts were quick to forecast their positive outlooks for Apple, Gene Munster with Piper Jaffray pumped the brakes a bit. In his reaction, he told investors that the ruling is "unlikely to meaningfully change" the competitive landscape in the smartphone market.

"We expect Samsung to continue to offer competitive phones to the iPhone in the U.S. and other markets," Munster wrote. " We believe what will truly decide the winners in the smartphone market will be individual hardware and software offerings that excite consumers, and we expect both Apple and Samsung to continue to deliver those experiences regardless of this particular court decision."

However, he does believe that the decision will make it more likely that other lawsuits between Apple and handset makers will move toward settlements. In those settlements, he believes software changes will be the most likely competitive outcome, though money will also likely be exchanged.

"We do not believe further settlements are likely to hamstring Android in any serious way," Munster wrote.
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Comments

  • Reply 1 of 60
    MacProMacPro Posts: 18,260member
    As others have said this can only help drive manufacturers to consider Windows offerings.
  • Reply 2 of 60

    Quote:

    Originally Posted by AppleInsider View Post





    Beyond Samsung, Daryanani believes the ruling could create more challenges for other smartphone makers who use Google's Android mobile operating system. He believes the decision could prompt both carriers and customers to be apprehensive about using products from Android-based handset makers.

    ----




    "We do not believe further settlements are likely to hamstring Android in any serious way," Munster wrote.


     


     


    Sooo point is, everyone's talking out of their @$$ to make a headline?

  • Reply 3 of 60
    As others have said this can only help drive manufacturers to consider Windows offerings.

    Lots of opportunities for Microsoft here as they are already licensing patents to various phone makers.

    Also Apple has licensed to Microsoft some iOS features as long as they don't copy Apple's offerings.

    Let's hope that Apple did a better job of licensing this time -- than they did with Mac OS.
  • Reply 4 of 60
    kerrybkerryb Posts: 270member


    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 

  • Reply 5 of 60
    quadra 610quadra 610 Posts: 6,743member

    Quote:

    Originally Posted by kerryb View Post


    I'm sure they will design software and hardware that is even better than anything Apple could produce



     


    O.o


     


    Well, we're waiting.   ;)

  • Reply 6 of 60
    lvidallvidal Posts: 158member
    kerryb wrote: »
    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 

    Dream on….
  • Reply 7 of 60
    quadra 610quadra 610 Posts: 6,743member


    Interesting that Android is already a revenue stream for Microsoft. Now it appears it might be a revenue stream for Apple. 


     


    So exactly what in Android *isn't* stolen?


     


    Even more interesting:


     


    “I will spend my last dying breath if I need to and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong” (Steve Jobs, on Android)


     


    Sounds like Jobs knew exactly what he was talking about. It's amazing how so much of what some consider to be his his "crazy talk" turns out to be strangely clear and prescient later on. 

  • Reply 8 of 60

    Quote:

    Originally Posted by kerryb View Post


    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 



    You wouldn't know what individuality was if it jumped up and bit you on the ass. You're just following the Samesung publicity meme to a T.

  • Reply 9 of 60
    Heh heh. The bonus will be that well finally get some honest sales numbers from Samsung. Perhaps that is what they're most afraid of.
  • Reply 10 of 60
    MacProMacPro Posts: 18,260member
    Lots of opportunities for Microsoft here as they are already licensing patents to various phone makers.
    Also Apple has licensed to Microsoft some iOS features as long as they don't copy Apple's offerings.
    Let's hope that Apple did a better job of licensing this time -- than they did with Mac OS.

    Well I'm not sure SJ actually gave Bill permission to reverse engineer Mac OS to make Windows in the first place lol. By the time Apple tried to take on the then tiny Microsoft to stop them they were hiding under IBM's apron.
  • Reply 11 of 60
    matrix07matrix07 Posts: 1,993member

    Quote:

    Originally Posted by kerryb View Post


    I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 



    And what did exactly prevent them from doing that in the past?

  • Reply 12 of 60
    geoadmgeoadm Posts: 81member
    kerryb wrote: »
    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 

    I had to look at your previous posts to work if you were serious or not... if you are serious, you are on a different planet to the rest of us
  • Reply 13 of 60
    welshdogwelshdog Posts: 1,684member

    Quote:

    Originally Posted by kerryb View Post


    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 



    He forgot the /s.

  • Reply 14 of 60
    shompashompa Posts: 343member


    People seems to forget that all Android vendors already pays a protection fee to MSFT. 5-15 dollar per device.

    MSFT charges Nokia 5 dollar per MSFT license. (list price is 15). 


     


    This won't drive vendors to MSFT, since they want to sell phones. Samsung makes billions on its Android phones. 


     


    The more funny thing is how Android is killing the telephone market. Only Samsung and Apple are making profit. Rest of the vendors loose money. 


    And for what? I still don't understand Googles plan. In the Google Vs Oracle trial Google published that they have made 500 million in ad revenue from Android 2009-2011. iOS generates about 2 billion a year in ad revenue to Google. Add to that the cost for the Android project. Google is spending 20 billion and makes less money then if they just used iOS. 


     


    Google is a very capable company. Their net services are way better then Apple. (mail/cal/sync/). Why did they choose to clone the iPhone instead of making something by them self like WebOS?


    This have to be one of the biggest mistakes in history costing Google over 20 billion so far. 

  • Reply 15 of 60
    rednivalrednival Posts: 331member

    Quote:

    Originally Posted by Quadra 610 View Post


    So exactly what in Android *isn't* stolen?


     



     


    I don't want to sound like I am disagreeing the idea that parts of Android are stolen, but you said that in regards to Microsoft receiving royalties for Android. I have to point out that if you are paying someone a royalty, you are not stealing anything.  You are licensing the technology.  That is how it is SUPPOSED to work.  That is at least one aspect of Android that is within the law, so lets not point to the right approach as if it is wrong.  As innovative as Apple is, it isn't going to reinvent the wheel.  They surely licenses patents from other companies as well.


     


     


    Quote:

    Originally Posted by Quadra 610 View Post


     


    “I will spend my last dying breath if I need to and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong” (Steve Jobs, on Android)


     


    Sounds like Jobs knew exactly what he was talking about. It's amazing how so much of what some consider to be his his "crazy talk" turns out to be strangely clear and prescient later on. 


     



    We have to be realistic about what the outcome will be here.  It is HIGHLY unlikely we will see the death of Android.  What we are most likely to see is what this article points to: Apple making millions or billions off of Android in royalties.


     


    I tend to think Steve Jobs would accept that victory, though he'd probably rather Android be gone entirely.

  • Reply 16 of 60
    quadra 610quadra 610 Posts: 6,743member

    Quote:

    Originally Posted by rednival View Post


     


    I don't want to sound like I am disagreeing the idea that parts of Android are stolen, but you said that in regards to Microsoft receiving royalties for Android. I have to point out that if you are paying someone a royalty, are not stealing anything.  You are licensing the technology.  That is how it is SUPPOSED to work.  That is only aspect of Android that is perfectly in the law.  As innovative as Apple is, it isn't going to reinvent the wheel.  They surely licenses patents from other companies and to other companies.


     


    Anything that isn't licensed but violates patents should be considered stolen.  We have to be realistic about what the outcome will be here and it is unlikely we will see the death of Android.  What we are most likely to see is what this article points to: Apple makes BILLIONS off of Android.


     


    I tend to think Steve Jobs would accept that victory, though he'd probably rather Android be gone entirely.



     


    Good point. However, Google has done virtually nothing in the way of cooperating with licensors. It's the Android OEMs that have come under increasing pressure. Google's mobile IP portfolio is very thin, hence the Moto purchase. Google is content to watch their partners from the sidelines. They file briefs in defense of their partners now and then, but have so far not committed themselves in particular. Probably because it is in their best interests not to. At least not at the moment. 

  • Reply 17 of 60
    al_bundyal_bundy Posts: 1,525member

    Quote:

    Originally Posted by kerryb View Post


    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 



    Galaxy S3? Galaxy Note?


     


    i've seen both and they are pretty nice. even thought about trading my 4S for a Galaxy Note. I don't talk that much on it but it would be a lot better for reading than my 4S and i don't feel like buying another ipad

  • Reply 18 of 60

    Quote:

    Originally Posted by kerryb View Post


    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 



     


    I'm sure Apple would like to find a few more juries to do Samsung more favors like that. :)  Seriously though, if you look at the history, you'll see that Apple approached Samsung years ago. Samsung had a different view and the two companies decided to hash it out in court.


     


    I won't comment on whether "Asia counties are a hot bed of creativity and individuality" but they had and continue to have every opportunity to to show it.

  • Reply 19 of 60
    adonissmuadonissmu Posts: 1,772member
    lvidal wrote: »
    Dream on….
    It was a joke.
  • Reply 20 of 60

    Quote:

    Originally Posted by kerryb View Post


    Maybe Apple did Samsung a favor in the long run, I'm sure they will design software and hardware that is even better than anything Apple could produce after all Korea like all Asia counties are a hot bed of creativity and individuality. 



    When ever this will happen nobody in this forum will care, unless life span can be quadrupled. But I don't think Apple will stop innovating that long.

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