Unless you've been avoiding news outlets as you catch up to your DVR's recordings of the Olympic Games in London, you're likely aware that Apple (Nasdaq: AAPL) and Samsung are in a very important legal battle.
Apple's patent infringement case against Samsung -- the only handset maker selling more smartphones than Apple these days -- is something that bears watching. However, let's not assume that Apple can merely win or lose this trial.
UBS analyst Steven Milunovich offered up a unique perspective yesterday.
He suggests that Apple may win if it loses the trial -- and lose if it wins the trial.
Confused? Don't be. Milunovich is actually making sense.
It's a win-lose or lose-win scenario
What happens if Apple emerges victorious? It gets to hold Samsung upside down, collecting any change that spills out of its pockets. Then what?
Suddenly, you'll find that Samsung, Nokia (NYSE: NOK), and HTC will have no choice but to come out with new designs. They'll have to think outside of the box. They'll have to raise the bar. Whether by chance or a stroke of genius, one of them may very well crank out the next smartphone model that everyone else will emulate.
In other words, Apple winning will force the competition to get creative. It's easy to argue that no one excels at design the way that Apple does; but don't underestimate consumer behavior.
Remember the top dog when Apple put out the first iPhone? It was Research In Motion (Nasdaq: RIMM). Those early BlackBerry designs seem dated in retrospect. What if Apple's winning forces the competition to take enough differentiation chances to the point where tomorrow's iPhone is today's BlackBerry?
It can happen.
Now, let's weigh the other verdict. Apple loses the case. Samsung and its cronies will continue to put out iPhone-like devices. There's no need to take chances. The status quo continues for at least a couple more years.
Apple can certainly live with that. Why do you think the stock closed at a new all-time high yesterday?
Android women from Mars
Does Apple really want to win this case?
Google's (Nasdaq: GOOG) Android continues to gain global market share, and Microsoft (Nasdaq: MSFT) is investing billions to make sure that Nokia doesn't fail in championing Windows Phone.
If you missed Gartner's latest market share report from last week, it bears refreshing.
| Q2 2012 | Q2 2011 | |
|---|---|---|
| Android | 64.1% | 43.4% |
| iOS | 18.8% | 18.2% |
| Symbian | 5.9% | 22.1% |
| Research In Motion | 5.2% | 11.7% |
| Bada | 2.7% | 1.6% |
| Microsoft | 2.7% | 1.6% |
| Others | 0.6% | 1.0% |
Source: Gartner
Android has become the consumer's choice for mainstream smartphone buyers. Apple's going to claw its way back when the iPhone 5 is out next month, but it's probably too late for iOS to settle for anything less than silver.
Don't worry about that, Apple bulls. There's obviously plenty of profitability to be mined in second place -- especially when the gold medalist is open source.
The real problem here would be if Samsung, HTC, and other Android specialists try to outthink Apple. They already have the more popular mobile operating system. They can always get lucky with the hardware, leaving Apple to do some design scrambling of its own.
Will this happen? Probably not. However, keep in mind that a unique advantage that Android has over iOS is that there are plenty of companies working in different ways. Apple may put out new phones every year, but Android devices come out with shorter refresh cycles.
Apple may very well be a winner if it loses this trial -- and a loser if it wins. However, the Fool’s senior tech analyst says otherwise. He covers every angle of the Apple investment thesis in the Fool’s brand new premium report on Apple, in which he details the opportunities and challenges in store for its shareholders. The report includes a full year of updates, so time's ticking. Check it out now.
