11 Comments

Summary:

UBS analyst Steven Milunovich argues that the biggest threat to Apple’s dominance in the long run is not a plethora of copycat smartphone and tablet makers — but a competitor out-innovating Apple, which could be ushered in by Samsung losing and Apple winning.

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Most Apple-Samsung patent trial watchers hold the same assumptions about potential outcomes: If Apple wins, the judgment will show current and future copycats the price to pay for imitating Apple products. If Samsung wins, it’s a license for anyone to develop and sell products that could be possibly confused for Apple’s best-selling designs, ultimately hurting Apple’s bottom line.

But what if the opposite is true? UBS analyst Steven Milunovich put forth a thoughtful note to clients Tuesday arguing that it’s ultimately in Apple’s best interest if it loses this case against Samsung. How could that possibly be? Here’s the argument:

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.’

“The real threat is not a competitor beating Apple at its own game but instead changing the game” — that’s a really interesting observation. Especially since that’s basically Apple’s corporate M.O. The company has been able to climb to the very top of the technology and business worlds because it’s changed “the game” on so many of its competitors — RIM, Nokia, Microsoft, Dell and HP among them.

Apple winning could force other companies to pursue real innovation in terms of phone and tablet form factors, how content is delivered, and more. But following either a win or a loss, it doesn’t mean Apple will sit still either.

  1. Oh, I don’t know about that. The last time Apple’s major competitor copied Apple and got away with it, we ended up with Microsoft dominating operating systems worldwide much to the detriment, and near bankruptcy of Apple. The Samsung situation is a little different, but not that far off. Android already outsells iOS and if that continues, Apple could be in trouble down the road.

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    1. Android might “outsell” Apple but Apple makes the majority of profits. Apple’s not going anywhere. Imagine if the opposite were true and Apple disappeared. Innovation would come to a screeching halt. Who would all these other companies copy? Consumers would suffer no doubt, far more than if Apple wins. Apple will continue to innovate because its deep in their DNA.

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  2. Everyone that works at Apple secretly wants Samsung and et. all to out-innovate them. It will only spike the competitive drive that everyone there already has.

    Sure Apple wants to be the best in every category it plays in but being on top is boring.

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    1. Not true. When you’re the fastest game in town, everyone’s out to beat you and you have to keep moving full speed ahead.

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  3. pinkyandthebrain Tuesday, August 21, 2012

    This is backward way of thinking. If Android / Samsung / HTC / etc. can come up with something different and much better than Apple, they should and the public will have a better product. Microsoft is trying to do just that but everyone is ignoring them.

    The Oracle / Google lawsuit revealed that Android was initially a copy of the RIM OS with Google apps. When the (iPhone)OS came out, they immediately copied it (badly still to this day).

    Android is a mean for Google to keep their source of revenue, not to offer a better end user product. And when you copy, you do not have to spent any R&D money so you can offer your product for cheap. The consumer ends paying less, but also gets a lesser product. Not entirely bad for consumers, but great for carriers, etc. as they get greater margins without offering anything substantially better.

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    1. There’s no R&D in Android?? Wow, I just learnt something.

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  4. Who even listens to “analysts” after the real Samsung numbers were revealed? I mean, Come on…
    http://scottsscripts.wordpress.com/

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    1. I have read several posts on your wordpress and even used the search function to “diamond” as in “diamond touch” and it didn’t give any results.
      I know the Apple vs Samsung trial is interesting, but it’s a pity you don’t even mention it. I would rather be happy that you break it down that it’s wrong to use the Diamond Touch (or other former devices) as defence/defense. But it would be much more reliable that people could make up their own mind, instead of reporting just bits and pieces, making it already biased…

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      1. Who are you talking to? If you’re replying to my comment then I’m not sure I’m following…

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  5. Andrea Camillo Miller Nepori Wednesday, August 22, 2012

    Big point missed here: to change the game you must be willing to do that in the first place. And to do that you need a huge amount of boldness and/or money to back you up. Apple used to have a lot of the former, less of the latter in the Steve years. It now has maybe less of the former but a lot more money to risk with no consequences whatsoever.

    Products like the iPhone or the iPod in the first place are products that need a very focused effort and “bet the company” decision that no other company is sincerely willing to make. They’re too anti-economic. It’s better to follow the flow and throw a lot of shit at the wall to see what sticks.

    That’s the way of Samsung and many other and it’s certainly not a suitable path if your aim is to revolutionize or disrupt a market.

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  6. I think that samsung will win in the long run. i have a iphone 3gs and am happy with the way it works, but i also have a samsung galaxy s3 and think that it has TONS more features than iphone.

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