Tuesday, April 19, 2011

Thoughts on Apple/Samsung Design Dispute

  • This particular suit appears to have little to do with Android since Apple's complaint revolves around design similarities with Samsung’s hardware, packaging, and TouchWiz application drawer.

  • In 2010, Samsung’s full year revenue from mobile was roughly $37 billion vs. $33.8 billion from the semiconductor division; however, profits from mobile were less than half at $3.9 billion compared to $9.1 billion from semiconductors.

  • Apple is reportedly a $5.7 billion customer, which I assume mostly involves the semiconductor division.

  • The delayed timing suggest that Apple probably first broached their issue with Samsung directly.

  • Modifying product design seems like a reasonable concession for such a large customer and shouldn’t be too difficult given Samsung’s consumer electronic track record.

  • Given everything above, why weren’t the two companies able to come to an agreement? I have three possible answers:

    1. Apple demanded too many design concessions.

    2. Samsung sees the ability to model it’s own products after Apple’s as strategic enough to fight for.

    3. Ego

    Any combination of the three are plausible, but number two is the most compelling in my opinion.

  • Finally, given his previous fiery rhetoric, I wouldn't be surprised if Tim Cook pulled the trigger on this one.

Samsung's 4Q Earnings PDF

This post required some quick won-to-dollar conversions, a task I am not well versed in. Feel free to comment if my math is broken.