(By Mani) The recent jury verdict in favor of
Apple, Inc. (NASDAQ:
AAPL) versus Samsung is a significant positive for the California-based technology giant as it establishes that Samsung had infringed on multiple patents of the iPhone maker.
The jury found that Samsung had infringed upon 6 of Apple's patents and awarded $1.05 billion to Apple. The patents infringed were related to Double-Tap to Zoom & centering, Scrolling bounce back, Pinch to Zoom & One fingered scrolling and 3 other design patents (front design, icon placements, etc).
Following this verdict, Apple may be able to win an injunction temporarily banning the sale of Samsung phones in the U.S.
Apple will have to file its requests and list what Samsung devices are in violation by Aug. 27 and Samsung will have two weeks after that to respond, and injunction hearings will commence on Sept. 20.
The award, though not big for Apple as it represents only 1 percent of Apple's cash position, could have significant industry implications for the smartphone industry.
Samsung, which tops in the smartphone market with 35 percent share, may have to redesign some of its hardware/software. Apple in the near term may argue that Samsung's current devices have to be taken off store shelves. Samsung is likely to appeal the decision following its lopsided loss.
In addition, the verdict is important in sustaining Apple's dominance over handset vendors especially Android-based and the final compensation could be higher. The ruling is expected next month.
"The dollar amount of the award, which adds up to 1.7M extra iPhones, can fluctuate possibly up to 3x as the jury decided Samsung acted "willfully" and if Apple files for a "post verdict motion," RBC Capital Markets analyst Mark Sue wrote in a note to clients.
Now, Apple could sue other Android manufacturers such as HTC and LG, while Google's Android has yet to respond. The current scenario may eventually make carriers and customers apprehensive about partnering with and using products from those OEM's.
In addition, the decision could intensify the OS wars as Android is by far the fastest-growing OS with 68 percent in the second quarter of 2012 and it remains to be seen how quickly Google can develop some workaround. Samsung's highly popular Galaxy SIII was not part of the original lawsuit.
"We expect Samsung may already have a contingency plan in place with software updates to work around any Apple patents. It's still too early to determine whether cross-licensing agreements that are amenable to both parties can develop," Sue noted.
On the other hand, Windows phone-makers may argue that their clean approach may appeal to a broader audience, and the stage is set for Nokia Corp. (NYSE:NOK), which is expected to unveil its new Windows 8 device on September 5.
Nokia may be another beneficiary of the verdict with its unique Lumia form-factor and its partnership with Microsoft Corp. (NASDAQ:MSFT). Additionally, both companies have a treasure trove of mobile patents, which would safeguard them from possible patent litigation.
Nevertheless, the iPhone 5 is well placed ahead of its potential launch in September. The iPhone 5 may receive a psychological boost ahead of the widely expected launch on Sept. 12 with availability anticipated in the following week.
"We expect the iPhone 5 to feature Qualcomm's MDM9x15 baseband. With some of the supply constraints in the Qualcomm supply chain mitigating, we expect a strong ramp into 4Q12. Additionally, the 9x15 offers both TD-LTE and TD-SCDMA capabilities, which would make the iPhone 5 compatible with China Mobile's networks, driving additional demand for iPhone units in CY13," Sue said.
Meanwhile, the verdict may provide an offset with regard to carriers who have been attempting to lower Apple centric subsides.
"If the injunction is enforced, we believe it could pressure carrier margins at Verizon, AT&T, and Sprint with the latter impacted in particular considering its Samsung concentration," Sue added.
For investors, Qualcomm, Inc. (NASDAQ:QCOM) is the best way to play the intensifying competitive smartphone industry as its chips are increasingly designed in Apple and Samsung devices.