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Samsung’s exposure: It can survive the Apple hit

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Samsung reported $41.5 billion in revenues and profits of $4.5 billion for the second quarter alone, so it can absorb the $1 billion in damages awarded by the jury in “tech trial of the century” if the verdict won by Apple (s aapl) Friday holds. The bigger question is whether the jurors’ findings of patent infringements will allow it to keep its revenue and profit momentum going.

Samsung is much more than a phone maker, but its smartphone business has been a growth juggernaut in recent years as its Galaxy line has emerged as the flagship brand for Android phones and the iPhone’s one legitimate challenger in the smartphone wars.

Samsung sold 50.2 million smartphones in the second quarter, nearly doubling Apple’s iPhone sales of 26 million. What’s more, 10 million of Samsung’s sales were of the new Galaxy S III, it’s most direct competitor to the iPhone. Of course, Q2 isn’t the best indicator: iPhone 4S is past its half-life as Apple gears up for a new iPhone launch next month, and the S III is a new device. But 2011 sales showed that Samsung and Apple were evenly matched in 2011.

The danger for Samsung is the long-term repercussions of today’s verdict. If Apple’s patents are held to be valid, Samsung could be forced to redesign its phones and their user interfaces. It’s found a recipe for success in the Galaxy line, but now it may have to change up the ingredients.

13 Responses to “Samsung’s exposure: It can survive the Apple hit”

  1. Rounded corners should not be a matter of conflict, can you imagine a tv with oval or round shape similarly should every manufacturer other than apple make a phone with sharp edges only even if it may injure the user, how can a web page on a normal size smartphone be seen without panning and zooming … I think it is childish … May or may not it seems a war like this in future will compel a user to study patent law before purchasing a smartphone

  2. Henry 3 Dogg

    “Samsung can easily absorb the $1 billion judgement if Friday’s jury award holds. With a $4.5 billion profit in the second quarter alone”


    But if the judge follows the jury’s guidance on wilfulness, and triples the damages to $3.1 billion when that will hurt.

    And that’s just for the first 7 patents. Many more were dropped without prejudice from the suit. They will now be pursued.

    And those damages only related to sales in the US. There are other markets to consider.

    Then there are ongoing licensing costs or damages related to the same patents, after the trial.

    No. Samsung can easily absorb a one off hit of $1Billion. But it cannot easily absorb the implications of this ruling. It is going to have to change it’s ways.

  3. Samsung “sold” 50 million smartphones?

    Says who?

    Not Samsung, that’s for sure.

    Why are writers so non critical about these unsubstantiated figures thrown about by analysts who don’t reveal their methodology?

    Hey, Samsung was thought to have sold “millions” of Galaxy Tabs and this court revealed actual sales were in the low hundreds of thousands in the US, making it highly unlikely sales topped even a million worldwide.

    Seriously, is the writer going to continue to believe Samsung sold 50 millions smartphones when they let firms flout sales of millions of tablets knowing how few they actually sold?

  4. AAPL offered to license Samsung its designs for $25-$50/unit, but SMSNG refused. Nice of AAPL offer, especially since SMSNG had clearly stolen from them. SMSNG was just too greedy to recognize common sense, now they’re paying for it.

  5. PXLated

    John B. — With all new tech for the times – Automotive, aircraft, electricity, etc. – There’s always been huge legal battles and the courts (juries) are the ones that ultimately decide the fate of patent validity. There’s really nothing new here in the Apple/Samsung battle. Big markets (and profit potential) always bring big litigation. It’s litigation that sorts everything out.

    • Kevin Fitchard

      Good point PXLated,

      Qualcomm have been duking it out for years with the whole mobile industry over the guts of the phone. We even got to the point of FTC ban on phones containing Qualcomm chips. Those fights definitely got noticed, but not on the level of Apple-Samsung.

  6. John B.

    Well, the jury has clearly spoken. It is what it is.

    However, my question through this whole ordeal is why hasn’t the USPTO or any patent office been investigated or questioned before rendering this landmark decision? This is not the first time litigations over IPs has emerged in this industry. Doesn’t the government suspect that something may be wrong when the this magnitude of court cases appear over IPs? To rely totally on a jury that may or may not have vested interests in Apple, seems preclusive. I don’t question some of these patents but, at the same time, I feel some of them should be rendered as standard patents. I don’t feel enough was done to view the internal steps of granting ownership. It seems in the last two years, the USPTO has been handing patents out to Apple like popcorn.

    John B.

    • Henry 3 Dogg

      They may or may not have a vested interest in Samsung too. The most surprising result was failure to convict the Galaxy Tab which so clearly breaches Apple’s design rights that after the jury found those rights to be valid, it seems almost inevitable that the judge will overturn that ruling.

      There are many companies that are granted far more US patents that Apple. Canon for example is granted several times as many. Apple just gets the ones that matter.

  7. Sri Lankan

    Having been presented with Isaacson’s biography of Steve Jobs, I have ploughed through the entire book. That he was a remarkable guy is clear, but what comes through most clearly is his ruthlessness. The man was obsessed with stifling competition.
    In the light of all that the ruling in favour of Apple is appalling.