(By Mani) The patent infringement case between Apple, Inc.
) and Samsung goes to the jury this week as both have made their final arguments in patent disputes covering Mobile computing, including patents for smartphones and tablets.
Cupertino, California-based Apple is asking for $2.5 billion in damages related to patent infringements while Samsung has countersued for $422 million.
A recent New York Times article suggested that a Samsung win would result in a consensus around Apple designs for years to come while an Apple win would result in a diversification of designs.
"A standard view would be that allowing competitors to copy Apple designs will cut into Apple's sales and margins," UBS analyst Steven Milunovich wrote in a note to clients.
Meanwhile, an Apple win would force rivals to be creative. In the short- to intermediate-term, an Apple win forcing competitors to come up with different designs should be positive because Apple is a better designer and could have a monopoly on key features.
However, in the long run, it could hurt Apple because the real threat is not a competitor beating Apple at its own game but instead changing the game.
"The likelihood of Apple being leapfrogged or a rival creating a new category is greater if they have to think out of the box. If they just copy Apple, like Coke, Apple can claim to be "the real thing," Milunovich added.
An Apple win could shift the industry paradigm in favor of Tim Cook-led California company as the Korean technology major's Galaxy S III and Galaxy Tab are threatening to take the market share from Apple's iPhone and iPad. The potential Apple victory would also be a big blow to Google, whose Android operating system is powering Samsung's devices.
If Samsung wins the case, it may hurt Apple's sales and profits from iPhone and iPads that account for a significant part of the company's valuation. For the third quarter ended June 30, 2012, Apple earned $8.82 billion or $9.32 per share, compared to $7.31 billion or $7.79 per share for the year-ago quarter. Quarterly net sales rose 23 percent to $35.02 billion. It shipped 26 million iPhones and 17 million iPads during the third quarter.
On the other hand, Samsung's second-quarter net profit was 5.19 trillion won ($4.5 billion), up 48 percent from 3.51 trillion won in the prior-year quarter. Total sales for the quarter increased around 21 percent to 47.60 trillion won. The company took about 35 percent market share by shipping 50.5 million smartphones, nearly double the 26 million iPhones sold by Apple.
Apple and Samsung have extremely rich portfolio of patents in the mobile space along with Google, Inc. (NASDAQ:GOOG). Apple has 8,991 issued patents in the mobile space, while Samsung has 64,976 patents. Meanwhile, Google has 14,770 issued patents in the mobile space, including Motorola Mobility.
"The most probable outcome will be a protracted negotiated settlement on cross licensing patents with all the parties involved namely: Apple, Samsung and Google, with little or no money changing hands as each one of the players have a very strong portfolio of patents in mobile space," Global Equities Research analyst Trip Chowdhry said in a client note.
Nevertheless, Apple's stock looks attractive going into iPhone 5 cycle. Although, in past phone cycles, the stock tended to consolidate both before and after the introduction, investors may be playing the product cycle earlier this time. Apple is said to be in the process of launching a iPhone 5 and a mini iPad priced at about $199 in September.
Apple became the most valuable company in history with its market capitalization touching $623 billion in intraday trading on Aug.20, topping Microsoft's record of $618.9 billion on Dec.30, 1999.