Steven Milunovich of UBS offered up a curious take on the epic patent battle being fought between Apple and Samsung. The hardware analyst told clients on Monday that if Samsung wins, the world of consumer computer could settle around Apple designs, keeping the company in the driver’s seat.
On the other hand, if Apple were to win, it could force its competitors to (finally) think outside of Apple’s box, which could lead to one of those competitors innovating their way around Apple. As such, Mr. Milunovich argued that losing its patent infringement case with Samsung could be a net win for Apple.
Mr. Milunovich’s research note was sparked by a New York Times article that focused on the way that a verdict either way could reverberate through the tech world. In that article, intellectual property attorney Christopher V. Carani said, “I think what we’ll see is a diversification of designs in the marketplace if Apple wins.”
Michael Gartenberg of research firm Gartner said that conversely that if Samsung wins, “Expect to see an awful lot of Apple knockoffs without fear of retribution.”
From the research note, as covered by Forbes:
A standard view would be that allowing competitors to copy Apple designs will cut into Apple’s sales and margins. In the short- to intermediate-term, an Apple win forcing competitors to come up with different designs should be positive because Apple is a better designer and could have a monopoly on key features. In the long run, however, it could hurt Apple because the real threat is not a competitor beating Apple at its own game but instead changing the game. The likelihood of Apple being leapfrogged or a rival creating a new category is greater if they have to think out of the box. If they just copy Apple, like Coke, Apple can claim to be ‘the real thing.’
It’s an interesting take on the situation, but one that belies the reality that there has been little innovation by Apple’s competitors worth a tinker’s wind. This is true in the PC market, where the original iMac started Apple’s resurgence.
Some Apple competitors tried to innovate by copying the iMac’s design and were turned back by Apple’s lawyers, who sued over trade dress grounds. After several Asian copycats were turned back, PC makers turned back to towers and ugly all-in-ones that no one much thinks about.
In the laptop world, the PC market was left flat footed by Apple’s MacBook Air until Intel goosed the market with US$300 million in development funds to help PC makers try and innovate by copying the Air. That effort has resulted in PC makers better playing catchup, but no one has leapfrogged Apple yet.
In the MP3 player market, Apple rewrote the rules with the iPod. There were a few sad efforts to copy the iPod’s look and feel, but no leapfrogging innovation. That market is mature enough now that it’s not likely to change. Apple remains large and in charge in this shrinking market.
Of course, the smartphone and tablet markets have much more potential than either of those older markets, and more potential means more effort. Mr. Milunovich is right that if competitors are forced to be different that they could come up with something interesting, but the reality is that there is no culture of real innovation at most if not all of Apple’s competitor.
Without that culture, we think it doubtful that Apple is going to be leapfrogged in the foreseeable future even if competitors are forced to think differently. Android fans and Apple haters will no doubt take issue with that pronouncement, but history is on our side in this issue.
In our opinion, Apple being able to protect its innovations offers the most benefit to Apple. If a competitor does come along that can leapfrog Apple, the company will be forced to work that much harder to reclaim its advantage, and that’s the real win for us as consumers.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.