Apple (AAPL) is getting plenty of ink over its court battles — most recently in its negotiations with Google (GOOG) over iPhone patents. Without Steve Jobs to innovate, Apple is trying to win in a court of law what it has been losing in the marketplace.
Apple won a $1 billion in damages from Samsung on August 24 in a California court on a claim that Samsung had “willfully” copied Apple’s iPhone and iPads. Apple requested eight Samsung products be banned from the U.S. market. And a hearing on that request is scheduled for December 6, according to AP.
Now Apple is in discussions with Google that have the potential to settle claims that Google’s Android violates eight of its patents. In a suit filed in February 2012, Apple asserts that Android specifically violates its patents with features such as “popular Google apps like YouTube, Google Maps and Gmail as well as Google’s Quick Search Box that lets users search multiple types of data at the same time,” according to the Wall Street Journal.
To stop Google, Apple requested an injunction against Samsung Galaxy Nexus sales but that request was turned down on appeal and should be decided in the next two months. Apple’s suit is scheduled to go to trial in March 2014 but the Journal reports that Tim Cook and Larry Page are discussing these patent issues – so perhaps they will come to a settlement.
When it comes to market share, Google’s Android has been roundly trouncing Apple. IDC reported that Android smartphone shipments accounted for 68% of the smartphone market to the iPhone’s 17% in the second quarter of 2012.Why is Android beating Apple? If you look just at product features, Laptop argues that the best Android phones have five compelling features that the iPhone 4S lacks:
4G Speeds: The iPhone 4S has much lower download speeds. Laptop argues that “every major carrier sells 4G Android phones, including Verizon (VZ)” offer handsets that download much faster — between “10 and 20 Mbps” compared to “1.5 to 2 Mbps.” for the 3G iPhone 4S.
No limit to Apps: Apple’s standards board limits what a user can download whereas, Laptop asserts that ”there are literally dozens of app stores in addition to Google’s Android Market.”
Keyboard Flexibility: Android offers many kinds of keyboards — “dozens of third-party alternatives, from Swype to Better Keyboard,” according to Laptop. It reports that “jailbreaking” is the only way to get an alternative to the iPhone’s keyboard.
Bigger Screens: The iPhone 4S comes only with a 3.5 inch screen whereas Android phones make many form factors available — as big as 4.5-inches for the Samsung Infuse.
NFC Support/Mobile Payments: The Samsung Nexus S and the HTC Amaze 4G have Near Field Communications (NFC) chips that enable those Android phones to let you pay at a growing number of retailers. Apple does not have this feature.
Will the iPhone 5 — rumored to be released within weeks – have the features needed to win more market share? The marketplace will decide.But one thing is clear — Apple and Google have very different ways of making money. Apple makes its profits from the wide gap between the price it charges for the iPhone and its costs. Android is designed to help Google make money from mobile advertising.
Apple’s iPhone had sales of $22.7 billion in the first quarter of 2012, as Tim Worstall noted, whereas Microsoft (MSFT) revenues were a lower, $17.4 billion. With a profit margin of 35% — the iPhone could generate profit of about $35 billion in 2012.
By contrast, GigaOM estimated that Google’s Android advertising revenues were a mere $550 million — a pittance compared to the $2.5 billion Google expects to make in 2012 off of iOS mobile advertising and “in-app advertising through Google’s AdMob subsidiary.”
While Google’s Android revenues look small, it has created a credible competitor to the iPhone — free of Apple’s constraints — and that means more choice for consumers.
Without Steve Jobs to mesmerize Apple users, does Tim Cook have any hope of growing iPhone market share through innovation, rather than global litigation?