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Why Microsoft is Celebrating Apple’s Patent Win Over Samsung

Microsoft was pretty much a bystander in Apple’s patent battle with Samsung, but the Windows folks couldn’t be happier with Apple’s $1.05 billion victory. By signing a patent deal with Apple and taking its own direction for smartphones, Microsoft is now better positioned to become a viable alternative to the Apple ecosystem.

Trouble for Samsung - which will appeal the ruling - threatens to tarnish the entire Android ecosystem (though Google may believe Android itself is immune, see Two Ways Samsung’s Court Loss To Apple Is Actually Good For Google). But Microsoft’s patent cross-license with Apple means we won’t be seeing similar suits between Apple and Microsoft.

So is this a genuine opportunity for Microsoft and its Windows Phone operating system?

No. Not directly.

Microsoft still has to convince consumers to buy into its ecosystem and raise its U.S. market share from a few percentage points to something more substantial. But the decision could encourage phone makers to lean away from Android and more toward Windows Phone, gaining Microsoft “shelf share” that could someday lead to actual sales.

“Microsoft can actually benefit from the Apple-Samsung verdict, as Windows Phone doesn’t look as expensive or controversial as Android,” said Patrick Moorhead, principal at Moor Insights & Strategy, in an email. “What once was a ‘free’ OS, Android now costs the Microsoft license fee, the potential Apple license fee, and the threat of legal battles with Apple. This could push smartphone vendors like HTC, Sony, LG and even Huawei and ZTE closer to Windows Phone.”

The doomsday scenario goes like this: In September, Apple will ask the court for an injunction, preventing Samsung from selling the infringing devices within the United States.

If Apple successfully bars the phones at the heart of the case from the U.S. market, the result will be a gaping hole on store shelves. While the ruling doesn’t include Samsung’s latest flagship phone, the Galaxy S III, an injunction would likely force Samsung to concede market share or spend heavily to aggressively develop new, non-infringing models to fill the gap.

Apple then marches through the ranks of other Android phone manufacturers, filing similar suits, winning fines and royalty payments, and possibly injunctions as well. Consumers are left wondering whether or not the phone they preordered will be barred from shipment before launch date - an unlikely scenario, but one that would undermine consumer confidence in Android.

Eventually, Apple would turn against Motorola Mobility, now owned by Google, for a final showdown - though Google’s “core” version of Android could be a tougher nut to crack As Google noted in a statement, Most of these [patents] don’t relate to the core Android operating system.”

So what does Microsoft actually gain from all of this? Three things:

First, there’s the simple answer: Microsoft’s patent deal offers protection. While the relationships could certainly sour, Microsoft must feel like it can operate with relative impunity at the moment.

Second, Microsoft can continue down its own development path without feeling like Apple is looking over its shoulder. While Microsoft’s Modern UI (formerly known as Metro), the “live tiles” or widgets that continually update, the “charms” and the Windows “home” button seem easily differentiated from Apple’s design, it’s always a good idea to avoid expensive, time consuming lawsuits - even if you eventually prevail.

“[The deal should] provide a stronger opportunity for both of Microsoft’s new platforms - Windows 8 and Windows Phone 8 - because they come with indemnification against Apple, suddenly making them far safer,” Rob Enderle, an independent consultant, told the BBC.

The third benefit may be the most important: tarnishing Android with the litigation brush leaves Microsoft looking squeaky clean by comparison. Manufacturers now have to factor in a “total cost of ownership” formula when choosing which mobile operating system to use - and that formula now has to include the very real threat of litigation.

From a consumer standpoint, the court case isn’t likely to sway Apple or Android partisans, but it could subtly push the general public away from Android.

They could run toward the safe bet: Apple. But they might be open to something new:

As Bill Cox, marketing director for Microsoft’s Phone division, tweeted following the verdict: “Windows Phone is looking gooooood right now.”

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Dell & Samsung Join Parade of Windows 8 Convertible Laptop/Tablets

The launch of Windows 8 may still be two months away, but the tide of new hardware releases is beginning to swell - including hybrid notebook/tablet devices from Dell and Samsung.

HP just announced a convertible Windows 8 notbook tablet (see HP Envy x2 Tablet/Laptop Combo Cuts Across Categories), while Dell used the IFA show in Germany to announce its first Windows RT device as well as a convertible notebook/tablet.

Not quite a convertible, Samsung debuted its Series X5 ultrabook, which looks exactly the same as the previous model, but adds a capacitive touch screen to the 13.3-inch display. Lenovo also debuted a series of Android tablets - including one with a detachable keyboard, following its earlier launch of the ThinkPad Tablet 2.

The message? Windows 8 is making touch more important than ever, and is driving a move toward tablets and convertibles that combine an ultrabook with touchscreen functionality to be both content creation and consumption devices.

Take the new Series 5 notebook from Samsung. Like its rivals, the new Series 5 will be released about the time of Windows 8, on Oct. 26. Starting at $799 with an Intel Core i5 processor, the real innovation is adding touch to the notebook screen to take advantage of Windows 8’s new user interface. But Samsung also said that those who don’t love the new Modern UI, (formerly known as “Metro”) will also be able to take advantage of a proprietary widget that replicates the “Start” button and control panel familiar from Windows 7 and Vista.

Dells new products include the XPS 10 (a 10-inch, ARM-based tablet running Windows RT) and the XPS Duo 12 convertible.

Dell had already said it would build a a Windows RT tablet, so the XPS 10 comes as little surprise. (Others promising RT tablets include Samsung and Lenovo.) Windows RT, as you might recall, is Windows 8’s little brother, a new version of the operating system that runs on ARM processors, rather than the X86 chips that power regular Windows 8 hardware.

Unfortunately, the release of a Windows RT tablet didn’t offer any peeks at the mysterious Windows RT operating system. But that wasn’t the case. The the XPS 10 was released under glass, blocking efforts to explore the interface, and how apps interacted with the RT interface. So we still don’t really know whether you should buy Windows 8 or Windows RT.

Dell also didn’t release the price of the XPS 10, the other major question surrounding Windows RT tablets.

Given the launch of the rival HP Envy X2 a day ago, however, it seems fair to say that PC makers believe convertible ultrabook/tablets will be the most popular new form factor.

Both the Envy X2 and the XPS Duo 12 combine a tablet with a keyboard unit that allows them to function as either a tablet or a notebook computer. The two aren’t exactly alike, however; the Envy X2 actually includes a detachable tablet, while the Duo 12 simply uses a screen that flips back and forth on a hinge, tucking the keyboard behind it.

Dell isn’t commenting on the exact specifications, even whether or not the “12” stands for a 12-inch display. The company did say in a press release that the tablet supports full HD resolution, however, and uses Corning’s Gorilla Glass for toughness.

“We haven’t disclosed full specs on the XPS Duo 12 and will be providing further info as we get closer to availability,” a Dell spokeswoman said in an email. “It does meet the Ultrabook specifications, so is based on Intel technology, and will run Windows 8.”

Dell clearly designed both the XPS 10 and the Duo 12 as devices that could be brought from home into an enterprise environment. “The XPS 10, XPS Duo 12 and XPS One 27 represent the culmination of a deep understanding of the ‘Bring Your Own Device’ movement and insights gained from both our consumer and business customers,” said Sam Burd, global vice president, PC product group at Dell, in a statement.

That combination of business and consumer uses is what Microsoft hopes will be Windows 8’s special sauce in a wide variety of devices including Microsoft’s own Surface. And it now looks like there will be plenty of choices in this new cross-over genre.

Of course, Microsoft isn't the only company hoping to ride the convertible bandwagon: Lenovo introduced the S2110, a 10.1-inch tablet that can plug into an optional keyboard dock that gives it a 20-hour battery life. It includes both 16 GB and 32-GB storage options.

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Apple And Samsung Both Lost. So Did Buyers

The fallout from Apple’s win over Samsung in a California patent court has been an extension of the rhetoric that took place within the court. Apple, smug after its billion-dollar settlement, claims the whole case was about values. Samsung still holds to the line that Apple’s design patents are frivolous and the real loser is the consumer. Neither side is wrong.

As much as Apple and Samsung want everybody to believe that one is on the side of good while the other is completely evil, the reality is that that is just not true. It is possible to not be right while not precisely being wrong.

Apple’s CEO Tim Cook called the victory a triumph of values.

“For us this lawsuit has always been about something much more important than patents or money. It’s about values. We value originality and innovation and pour our lives into making the best products on earth. And we do this to delight our customers, not for competitors to flagrantly copy,” Cook wrote in a memo leaked to 9to5 Mac.

Cook is not wrong, but he is not correct. Apple is right to defend itself against copying. But, it is not like Apple was defending the invention of fire. It was defending design patents based on the size and shape of the iPad and iPhone as well as utility patents used in iOS.

None of the patents that Apple fought tooth and nail over in the name of values are particularly innovative.

The utility patents may have some functions specific to iOS, but the Android manufacturers have already figured a way around most of those because it was not the function that Apple patented so much as how the function is performed. Companies like HTC, Samsung and Motorola have been working on ways to circumvent those patents through design and functional updates to their devices, and Apple will have little grounds in court to sue the Android manufacturers over these same functions again.

The patents themselves are just weapons against Samsung and other Android manufacturers.

The settlement money is also of no concern to Apple. This is a company that is one of the most valuable in the history of the world, sitting on a $100 billion in liquid assets. But taking a billion dollars from Samsung was a reward in itself.

Cook’s comments about values is public relations. Most journalists, analysts and tech enthusiasts have a better understanding of Apple’s motivations under the surface. Apple's two biggest motivations were to set a precedent for all its upcoming patent cases and to slow the Android ecosystem's growth. The more Apple can hobble Android, the more iPhones and iPads it can sell. With Apple’s extraordinarily high margins, there is a lot of money on the table.

The effect on Samsung is marginal in the short term. This case was mostly about Samsung’s long product tail, with devices that had been on the market a year or more running software that has been completely overhauled to avoid these specific Apple patents.

Samsung will likely appeal the judgment, mostly to avoid the precedent that the case sets. This is not the last time these two companies will meet in court over patents. Apple’s win makes it more likely that its similar patent cases against Samsung and other Android manufacturers will result in injunctions against Android devices. Samsung needs to negate that precedent.

After the announcement of the verdict, Samsung issued a statement:

“Today’s verdict should not be viewed as a win for Apple, but as a loss for the American consumer. It will lead to fewer choices, less innovation, and potentially higher prices. It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies.”

It is difficult to believe both companies. Samsung says that Apple’s win is bad for innovation. Apple said it is good for innovation. Again, neither company is right, but neither is wrong.

When Apple speaks of innovation, it is not talking about the broad scope of technology innovation. Apple is talking about its own innovation. Innovation that has been called into question many times over the years. Apple is seen as a company that makes technologies better and sexier and prices its devices higher than the competition to pad its margins.

Samsung is essentially saying that Apple’s designs and its legal claims are frivolous. It is implying that if Apple can improve on technologies and not be found guilty of copying, then so can we.

Samsung certainly has a high opinion of itself. By calling the verdict “a loss for the American consumer” it is saying that its products are so good that the U.S. consumer will suffer for the loss. It is the same tactic that Samsung has used in most of its court cases against Apple across the world. “This bully is bad for us, bad for you, bad for everybody.”

Samsung itself is a bit of a bully. It has the manufacturing might to flood the mobile market with so many devices at so many price points that it is squeezing not just Apple, but the other Android manufacturers. Motorola’s market presence is almost non-existent at this point and HTC is flailing. Samsung, not Apple, is the biggest culprit behind Nokia’s fall from grace. Samsung’s shotgun strategy works and cannot (or, cannot without great difficulty) be replicated by any other Android manufacturer.

Samsung’s own rhetoric is as hypocritical as Apple’s. While Samsung claims it did not copy Apple in the slightest way (and it has a case for that, despite the jury’s verdict), there is no question that some of Samsung’s smartphones do look very similar to the iPhone.

In the end, the outcome was predictable. Can anyone say that Samsung could win a case with a Californian jury in the shadow of Cupertino? Samsung never really stood a chance.

The battle of rhetoric does neither company justice. Apple comes off with a morality play that is almost laughable. Samsung sounds like a whining, arrogant twit that insists it did nothing wrong. With this decision, all Android manufacturers lose, not just Samsung. In the end, that is how the American consumer loses too.

That means Google loses, too, right? That's not necessarily the whole story. Apple could be doing Google a favor with its courtroom war.