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Is Microsoft Really the Winner of the Apple vs. Samsung Verdict?

One of the more under-covered aspects of the Samsung vs. Apple verdict was the king's ransom Apple had wanted for a cross-licensing agreement. Apple had offered to license its patents to Samsung for $30 per smartphone and $40 per tablet. To put that in perspective, that's licensing rates beyond what Qualcomm, long known as the patent tollbooth of the telecom world, gets on most devices. Qualcomm's licensing business collected more than $5.4 billion in extremely high-margin sales in the last year. 

So it's no surprise Samsung turned down that licensing offer. Tablet competition already faces a tough road reaching Apple's economics; another $40 in licensing would be crippling. Also, with low-end smartphones already paying Qualcomm a 3%-5% licensing fee on sales prices, another $30 to Apple would mean lower-end phones could face the specter of having up to a third of their costs just being licensing. 

In contrast to Android, Microsoft has gone to pains to make its Windows Phone feel different from the iPhone. Not only that, but it has an existing cross-licensing agreement with Apple from 1997 and has purchased patents for its own defense. One of the downsides of Windows Phone has always been that its licensing costs were initially reported to be as low as $7 to $15 per unit, but handset makers such as ZTE have since claimed the licensing fee was closer to $20-$30. That's a high cost when your largest rival, Android, is "free" to license.

Yet if Apple's battle continues adding costs to Android through litigation and future licensing costs, that Windows Phone fee doesn't look so harmful. Now, Microsoft's main trick has to be getting users to actually buy into its phone. To see Senior Technology Analyst Eric Bleeker's thoughts, watch the following video.

Apple is the most influential company in technology and has delivered market-smashing returns for those lucky enough to have invested in the company. Now its position looks even stronger in the wake of its court victory over Samsung. However, with the impending release of the iPhone 5 and Apple TV on the horizon, the stakes have never been higher for the company. If you're looking for a recommendation on how to play Apple along with continuing updates and guidance on the company whenever news breaks, we've created a brand-new report that details when to buy and sell Apple. To get started, just click here now.


Eric Bleeker has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, Microsoft, and Qualcomm. Motley Fool newsletter services recommend Apple and Google. 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 (3) | Recommend This Article (5)

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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 September 01, 2012, at 11:35 PM, AdamChew wrote:

    Apple's litigation does not add any cost to the google/samsung phones.

    Once they innovate to their own UI everything will stop.

    Since when Apple litigate to stop innovation they do/did to protect their IPs.

  • Report this Comment On September 02, 2012, at 3:00 PM, xMoe1 wrote:

    Android is not free to license ... Microsoft is making a small fortune from Android OEMs. Microsoft, Apple and others spent $4 Billion on patents, technology and licensing certain technologies. Google had to pay $12B for Motorola Mobility ...

    Strange bed fellows as the patent wars heat up. Maybe Microsoft is the quiet winner in all this. Lets just hope Balmer & Co aren't so stupid as to dumb $6B into a money loser...


  • Report this Comment On November 27, 2012, at 11:13 PM, jtrucka wrote:

    i have no love for microsoft ,,they leave problems unchecked and just move on to something else ,,, had they been making cars or televisions , they would have gone out of business years ago ,,,they should be more accountable for their products ,,, but their share of the world market highlights all of this ,,,

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