Apple/Samsung Ruling Puts Pressure On Google, Could Spark Innovation Within Android
Shares of consumer electronics marketer Samsung tumbled this morning following a U.S. jury’s decision Friday to award Apple a $1 billion settlement in a patent infringement suit that could have a chilling effect on other players in the high-stakes mobile computing marketplace, especially Google.
“We believe Google shares could see some near-term weakness on the ruling,” JP Morgan analyst Doug Anmuth wrote in an equities research report sent to investors this morning.
Anmuth said the decision was a “negative” for Google’s Android ecosystem because it will put pressure on Google and Android developers to “clearly differentiate” their devices from Apple’s, because the ruling suggests the courts may be willing to tightly enforce software and design patents.
A nine-member jury found that Samsung infringed on six of seven of Apple’s patents for mobile devices. In addition to the monetary damages, the verdict could lead to a ban on the sale of some of Samsung’s mobile devices in the U.S. Samsung’s popular new Galaxy S3 was not affected by the ruling.
While Samsung is expected to appeal the decision, its shares declined more than 8% when trading began this morning on the Korea Exchange.
Google, and Motorola, a major manufacturer of Android-based smartphones and mobile devices, are expected to come under particular pressure from the ruling.
JP Morgan’s Anmuth estimated that Google’s Android operating system currently has a 60% share of the global smartphone marketplace, and that Samsung represents more than a 50% share of that, followed by HTC (10%) and Motorola (6%).
“Google and Android OEMs will likely now have to work around certain features of the operating system and their devices,” wrote Anmuth, adding: “In some ways, closer enforcement of existing patents could spur greater innovation within Android.”
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