Blog Post

Analyst: Apple “Disrupting” iPhone Competitors With Legal Threats

Via Apple 2.0, Oppenheimer analyst Yair Reiner asserts in a research note that Apple’s (s aapl) lawsuit with HTC over the iPhone interface was the culmination of “blunt talks” with other phone manufacturers.

According to Reiner, starting in January Apple began closed-door discussions with OEMs regarding the company’s “growing displeasure” with the theft of Apple’s intellectual property.

That displeasure was first noted a year earlier at a conference call. Apple COO Tim Cook responded to a question about the Palm Pre (s palm) by stating that “we will not stand for having our IP ripped off,” though Cook wasn’t necessarily talking about Palm, or just Palm, anyway. Earlier this month, Steve Jobs publicly accused HTC of theft in a press release associated with the iPhone lawsuit. Unfortunately, that lawsuit may not ultimately protect the iPhone the way Steve Jobs thinks.

However, in the short term tough talk and legal action has, according to “industry checks” by Reiner, resulted in hardware manufacturers reassessing their positions regarding Google’s (s goog) Android operating system.

Rival software and hardware teams are going back to the drawing board to look for work-arounds. Lawyers are redoubling efforts to gauge potential defensive and offensive responses. And strategy teams are working to chart OS strategies that are better hedged.

Ignoring the negative impact on consumers from stifling innovation in the name of intellectual property rights, the real-world implications of driving hardware manufacturers away from Google is that they will be going towards Microsoft (s msft). With Windows Mobile as good as dead, and Windows Phone Series 7 not to be released until the end of the year, it could have been argued that Microsoft was close to being pushed out of the mobile market entirely. Don’t count on that now.

Microsoft has been quick to sniff out this burgeoning opportunity and has begun to aggressively promote the strength of its own IP portfolio, as well as its willingness to join battle with customers that come under IP attack.

It’s one thing to threaten a relatively small company like HTC, but quite another to go after Microsoft, as Apple found out once before. While temporarily disrupting Android through lawsuits isn’t going to make that problem go away, it might just help Microsoft get back in the mobile business.

6 Responses to “Analyst: Apple “Disrupting” iPhone Competitors With Legal Threats”

  1. “Ignoring the negative impact on consumers from stifling innovation in the name of intellectual property rights, the real-world implications of driving hardware manufacturers away from Google is that they will be going towards Microsoft. ”

    The purpose of IP law is to not to protect consumers by allowing anybody to copy the work of others, its to foster innovation by protecting the innovations of companies which do innovate. You may not agree with the premise behind the law but that’s the law; firms which innovate should get a legal competitive advantage. It’s not that IP law doesn’t recognise the importance of the consumer in all of this but the idea built into the law is that if companies innovate and get their IP protected, that will encourage others to innovate and by companies competing to innovate the consumer benefits. Further, if firms don’t protect their IP patents, the patent essentially becomes non-defendable if the protected idea becomes commonplace. So there is actually presssure on firms to sue if others infringe on their patents. You seem to have a basic misunderstanding of how the law is designed to work.

    • I could argue that you have a basic misunderstanding of Article I, Section 8, of the U.S. Constitution.

      “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

      But instead perhaps we just disagree.

      However, if the litmus test of every patent is whether it promotes progress or hinders it, patenting “slide to unlock” falls into the latter category. There’s little debate that the patent system in the US is badly in need of reform. Apple’s lawsuit against HTC is just another reason why.

  2. This kind of action could turn popular opinion of apple as “cool” to something rather distasteful and paint others (including microsoft) in much nice color.

    Apple have become in the bully in the school ground, rather then focusing on improving what has become an “okay” product (I own an iphone), they are looking to stop people from taking a leap forward from where they’ve stopped.

    The problem with becoming world champion is that your competition will work harder to beat you, you no longer have a satisfactory bench mark from which to gauge yourself.

    I honestly don’t think this is a good move for apple. They’ve done a lot of great things in the past for the industry as a whole, but this is going to turn people against them, from once been a company about encouraging the creative potential of it’s users to one the hordes, restricts and protects…not the best move in the world me thinks

  3. These IP rules and patents aren’t getting us anywhere. When will the governments realize this and step in on behalf of the consumers cuz we are the ones negatively effected by this.

    I own an Iphone and like how it works, but whatever happened to fair competition and allowing people to innovate.

    Just build the best product you can and let the consumers decide.