We now know when new Apple (NSDQ: AAPL) CEO Tim Cook is going to have his first “What would Steve do?” moment. Early accounts of a greatly anticipated biography of former Apple CEO Steve Jobs reveal just how emotionally he reacted to the development of Google’s Android operating system, and just how determined he was to get revenge through the patent system. Do Cook’s passions for patent litigation run as deep?
Apple and Google’s complicated relationship over the last decade is pretty common knowledge in Silicon Valley. They were once close partners brought together by a mutual disdain for Microsoft (NSDQ: MSFT), with Google’s Eric Schmidt serving on Apple’s board of directors and prominent Google (NSDQ: GOOG) products like YouTube and Google Maps playing a prominent role on the first iPhone. But after Google plunged headlong into the smartphone market with Android, and especially after Android engineers pursued a design that resembled the iPhone more than the BlackBerry, Jobs could no longer stomach the search company he once so admired.
“I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion [at the time] in the bank, to right this wrong,” Jobs said in Walter Isaacson’s biography, which will be released Monday, two and a half weeks after Jobs died. “I’m going to destroy Android, because it’s a stolen product.”
Jobs said those words the same week in 2010 Apple plunged headlong into mobile patent litigation, suing HTC for infringing on the iPhone with its Android-based smartphones. Other suits have followed against companies such as Samsung and Motorola (NYSE: MMI), and the mobile world has found itself in a patent-related legal quagmire.
Most patent litigation ends in a settlement: high-profile legal warfare is mighty expensive for both sides, and most defendants are willing to pay even more to avoid the prospect of an injunction should their product be found in violation of the plaintiff’s patents. Yet it now seems pretty clear that under Jobs, Apple wasn’t going to settle for less than total capitulation from Android vendors and maybe even Google itself.
But a different man runs Apple now. Much less is known about Tim Cook as compared to the legend of American business that he succeeds, but a 2008 Fortune profile of Cook included an anecdote about his leadership style that concluded: “The story is vintage Cook: demanding and unemotional.” Later, Cook is described as “temperamentally different [than] Jobs. Cook is cool, calm, and never, ever raises his voice.”
The other reason so many patent lawsuits end in a settlement is because they can grind on for years of countersuits, appeals, and endless hearings to quibble over small details. It’s true that at the moment, Apple seems to have the upper hand in its legal efforts.
Android companies know they hold weak patent positions, signing deals left and right with Microsoft over their exposure to that company’s patents. Apple and Microsoft successfully teamed up to control the rights to Nortel’s 6,000 mobile patents, denying their protection to Google in the same breath. And Apple is forcing Samsung into an increasingly difficult position when it comes to the tablet market.
Yet “destroying” Android could be a multiyear legal odyssey that is by no means certain. If Google manages to purchase Motorola and its arsenal of mobile patents (which aren’t necessarily an ironclad defense themselves, but that’s an entirely separate story), Apple could be eventually forced to confront Google and its formidable resources directly rather than suing its partners. The outcome of Oracle’s lawsuit against Google might provide some insight into how direct conflict between Apple and Google might evolve, but that case has been postponed until 2012.
The next time Cook evaluates Apple’s legal strategy, how will he balance emotion and logic? Android may be the world’s leading mobile operating system, but most mobile critics would agree it lacks Apple’s polish. And even if you agree that Android ripped off iOS, it’s clear that the original is a far more profitable venture.
So while Google might be winning the market share battle, it’s harder to argue it is winning the overall mobile war. Mobile developers consistently rank iOS ahead of Android when it comes to development priorities, and Apple’s brand and profits have never been stronger. And Apple’s shrewd component supply deals (orchestrated by Cook) actually have it in a position where it can offer a premium product with better margins at the same cost as Android rivals.
In other words, is Android really hurting Apple where it counts? Google’s basic goal when entering the smartphone market was to ensure that Apple’s tight-fisted control over what could run on the iPhone would not be the only paradigm in the new mobile era, in the hopes that an operating system open to different partners would ensure Google could still fight for mobile searches. It has achieved that goal, but it hasn’t made a dent in Apple’s mobile cash cow.
Given that Apple continues to succeed in mobile, at a certain point someone not as emotionally tied to the destruction of Android may wonder why Apple continues to pay legal fees just to mess with Google (NSDQ: GOOG). That, of course, doesn’t mean that Apple would let Google and Android partners off the hook: if they are determined to have infringed on Apple’s products, they should have to pay, and those payments could be extraordinary.
But nor does it mean that Cook is beholden to pursue an emotional scorched-earth campaign against something that isn’t really making a dent in his bottom line. For now, just weeks after Jobs’ death, it’s hard to imagine Cook deviating from the path laid out by someone he clearly considered both a mentor and a friend. During Apple’s earnings call last Tuesday, he declined to comment specifically on Apple’s legal strategy but did say that “we spend a lot of time and money and resources in coming up with incredible innovations, and we don’t like it when someone else takes those.”
One of the most compelling storylines–perhaps ever–in the technology industry will be the performance of Apple following the death of an irreplaceable genius who may have left behind a road map but did not leave behind his indomitable will.
Will Cook be as determined as Jobs to wipe Android from the face of the earth? A mobile industry shell-shocked by the patent disputes of 2011 is anxiously awaiting any sign of his intentions.