Is Apple About to Corner the Smartphone Market?

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Now that Apple (Nasdaq: AAPL  ) has been officially awarded a patent for the multitouch technology governing the iPhone and iPad, intellectual-property experts are taking to the media to warn of dire consequences for competing smartphone makers.

Open-source and intellectual-property activist Florian Mueller, who Fools may remember was a key opponent of Oracle's (Nasdaq: ORCL  ) acquisition of MySQL, told PC Magazine that Apple's multitouch patent is so broad as to make it difficult to "build a competitive smartphone." Maybe, but don't we also have to concede that peers have had trouble competing with the iPhone for a while now? Since Day One, Apple's iCandy has been gobbling market share like Pac Man gobbles pellets.

Mueller further suggested that, unless courts invalidate the patent, Apple would have free rein to bully competitors and stifle innovation. Too harsh, you say? Perhaps, but we've seen Apple play patent hardball in years past.

Last March, the Mac maker sued fast-growing HTC over what it said were violations of its iPhone innovations. Apple has also accused Palm of copying its designs and taken legal action against Motorola Mobility (NYSE: MMI  ) and Nokia (NYSE: NOK  ) . There's enough history here to take Mueller's concerns at face value.

Less clear is whether investors should be concerned about a new round of patent litigation. So, we're asking. Are you concerned? If so, why? If not, why not? Please vote in the poll below and then leave a comment to tell us what you think about the implications of Apple's multitouch patent.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Oracle at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Oracle and Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (12) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 23, 2011, at 7:39 PM, TomFrog wrote:

    This poll is a bit misleading; there's no indication that Apple intends to shut down the smartphone market. Large technology companies use patents defensively as part of broad cross-licensing deals both with partners and competitors.

  • Report this Comment On June 23, 2011, at 8:04 PM, Henry3Dogg wrote:

    I find much of this confusing.

    Personally I am against most patents and think they are far to widely and easily issued for things which are little more than obvious solutions to a problem.

    But given that patents exist, then its nonsense to suggest that a company that uses them to protect the uniqueness of its products, is doing something wrong. For better or for worse, that is exactly what they are for.

    Apple is currently an innovative trend setter in product design and as a consequence it's products are being widely imitated.

    Under our current patent system it should be expected that it will use its patents to reduce the impact.

  • Report this Comment On June 23, 2011, at 8:05 PM, bugnuts wrote:

    Competitors are not in trouble because of Apple's patents. They're in trouble because they've failed to learn lessons about producing consumer-friendly goods. We see time and again manufacturers junk up decent products with unnecessary and ultimately useless features because they think "more is better."

  • Report this Comment On June 23, 2011, at 8:20 PM, bbrriilliiaanntt wrote:

    Woulda been easy for anyone to have figured out swipe, 2-finger swipe, etc. But no one did, embarrassing! Apple did it and deserves the Licensing/royalties, only fair...samsung also did blatantly still the design , l/f of the iPhone iPad. Innovate or die! Aapl to $1T market cap! at-the-money Jan-2013 calls, nobrainer, shhhhhhhh! -Craig

  • Report this Comment On June 23, 2011, at 9:07 PM, steveonyx wrote:

    I agree with those that talk about Apple being a big winner because of the innovative and consumer based focus and execution. The patent system appears to be a necessary evil. What really creates a sustainable winner is the ability to innovate and execute. Nobody in consumer electronics or computing devices does it like Apple.

    Which is why I'm very bullish on the Apple stock, even during the recent weakness. Check out my Apple blog at http://onyxinvesting.com/category/apple/

    By the way, the recent stock price weakness has just about been crushed. It will be pushing through the $365/barrier sometime leading up to the next earnings release. Don't miss out on this opportunity to get into the stock in one way or another.

  • Report this Comment On June 23, 2011, at 9:13 PM, IRBYINC wrote:

    I think all four options on the poll are insteresting for discussion and can be agrued pro/con all day long. I beleive obtaining the patent would be beneficial for AAPL. Thus making it a buy. Makes me wonder if I should of increased my position on the 20th? Side note when will the IP5 come out I'm still holding out with my IP3. This release could also be a mover for the ticker.

  • Report this Comment On June 24, 2011, at 12:08 AM, techy46 wrote:

    Pretty absurb that you can patent the way we use our hand, fingers, to minipulate any object. It'll be interesting to see how the competitors attack the issue; head on or obliquely. The m and n-finger approach is so broad that it seems to be very anticompetitve but that's why we have so many courts and lawyers. If I were the Chinese or Indians I'd tell the US and EU to shove your patents, they don't apply over here. We stole the country from the American Indians using white man laws (European) but that didn't make it right did it. I wonder who holds the patent on ..I..?

  • Report this Comment On June 24, 2011, at 1:43 AM, lucasmonger wrote:

    All the competitors will need to cross license multitouch, but if Apple makes it extremely expensive, then the others will die from not being able to make a profit. Another tact could be for apple to start suing everyone and demand these other products be taken off the market.

    Every single touchscreen phone and touchscreen tablet to date has been trying to imitate the iPhone and iPad (funny, other than Microsoft, nobody seems to be trying to imitate the iPod touch, and Microsoft gave up).

    Life in the smartphone and tablet arena is about to become increasingly interesting. Who knew that in 1998 when apple almost closed it's doors that the tables would turn so over the next decade. Makes me with I had more stock from 2003!!!

    As the entire industry stumbles over itself trying to imitate the iPad 2, I predict apple will come full circle with an entirely new computer concept (we are seeing a preview of some of it in os x lion) that will catch the computer industry flat footed yet again.

  • Report this Comment On June 24, 2011, at 1:51 AM, berada wrote:

    Apple pays for use of Amazons "one-click" payment "innovation" ... pretty obvious solution, so it seems reasonable for Apple to make claims for royalties based on this patent.

  • Report this Comment On June 24, 2011, at 3:17 AM, deasystems wrote:

    So Florian Meuller thinks Apple's patent could stifle innovation. What a stupid idea! Now Apple's competitors may *have* to innovate instead of being mere copycats.

  • Report this Comment On June 24, 2011, at 4:01 AM, Fictual wrote:

    Too many Apple fanboys that buy into the hype.

  • Report this Comment On June 25, 2011, at 9:34 PM, goscuderi wrote:

    If challenged collectively by the other OEM's, the courts might not invalidate the patent, but they could potentially try to restrict licensing revenue such that the fees do not impose such an anti-competitive burden as to make it impossible for other smartphones to be brought to market.

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