Apple Plays the Long Game Against Android, Aiming for a Big Pot

Published on January 10, 2012
by John Paczkowski

Think Apple’s broad legal battle against Android will end in a series of settlements? Think again.

The company’s in no hurry to resolve its legal claims against Android smartphone vendors like Samsung, HTC and Motorola, says Deutsche Bank’s Chris Whitmore. Instead, it’s likely holding out for a big payoff.

Which is a wise move, because in doing so Apple is undermining Android in a number of ways. The threat of litigation is obviously a deterrent — or at the very least, a consideration — to any handset manufacturer mulling Android as a potential OS for its devices. And for those OEM’s that have already been sued, it significantly raises the cost of supporting Android.

So realistically, expediency isn’t the game here. The longer these cases drag on, the better it is for Apple, especially if the company ends up prevailing in the end. Whitmore seems to believe it’s the likely outcome and figures Apple could end up collecting a fee of $10 for every Android device sold, which would add about $35 to its share price. And though less likely, if it wins outright and convinces a court to ban some Android handsets, the upside is even greater, as you can see in the chart below.

“Although Apple has not expressed a desire to settle, most believe a settlement could occur resulting in a $10-per-unit software licensing fee,” Whitmore says. “… Beyond the monetary benefit to Apple, a settlement would make Android-based handsets incrementally more expensive and less competitive due to the higher OS cost and would likely support incremental iOS share gains vs. Android. … Given the upside potential associated with an outright win, we don’t expect Apple to settle anytime soon.”

Over at FOSS Patents, Florian Mueller takes issue with Whitmore’s $35-per-share figure.

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