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Don't let Apple (NASDAQ:AAPL) and Samsung's (OTC:SSNLF) litigation and competition over smartphone and tablet products fool you. Effectively it allows for further exposure that keeps them at the forefront of media and consumers, helping the two giants increase their dominance in the mobile device sector. Why wouldn't they want a 50/50 split in both the smartphone and tablet markets leaving other players out? That would be a huge win-win for Apple and Samsung regardless of whether Apple receives another half a billion US dollars or so more in compensation. The two companies began their litigation against each other in mid-2011 claiming patent infringement while Samsung was supplying memory and processor chips as well as other components to Apple with revenues totaling several billion US dollars. Germany, UK, Japan, South Korea and US courts took upon various litigation cases against Samsung alleging violation of Apple's patents that claimed ownership of a handful of rudimentary product designs and features. While Apple did not win some of the cases in Japan and in the UK has won won in California as far as establishing Samsung's violation of certain patents. Samsung agreed to pay $52 million, far short of the $1 billion Apple was first rewarded. The case has been dragging out over the course of the past year, going back and forth with jurisdiction first denying the bulk of Apple's demand, followed by the recent addition of $290 million to Samsung's penalty (here).

Must Go Beyond Litigation

Current litigation will subside and new ones may be surfacing to keep alive the rivalry between Apple and Samsung. But they must do more because technologies and products are evolving fast, creating a landscape for other vendors to also capture consumers' interests with alluring upgrades involving unique, desirable features and apps for the right prices. While they split the top two spots (smartphone: AAPL (13%), Samsung (30%); tablet: AAPL (30%), Samsung (20%)), Apple's biggest concern isn't Samsung but other smaller players that are growing many times faster, taking away some market share and profits with different features, partnerships with telecom providers, and lower prices. These include Nokia (NYSE:NOK), Lenovo, Huawei and LG in the smartphone space, and Asus (OTN: OTC:ASUUY), Nokia-Microsoft (NASDAQ:MSFT), Lenovo and Acer (UK: ACID) in the tablet space. To combat such competitors, as well as others that are emerging in Asia for smartphones (Xiaomi, Huawei and Micormax), Apple and Samsung both have focused on display and compactness for important upgrades.

Samsung touts its display prowess with state-of-the-art AMOLED as well as LED-lit LCD screens as discussed in my other article (here). Apple answers back with its Retina display in a number of flagship products. Display quality depends on resolution, contrast, brightness and color properties that include gamut, vibrancy, balance, rendering, tint and others which rely on hardware as well as software technologies. The current display quality in smartphones from Apple, Samsung and a number of other vendors are quite decent and pushing the envelope further will only bring diminishing returns. Similar things can be said about the iPad mini and other similar-size mobile devices because their screen size is fairly small for reaping the benefits of higher resolution much beyond 2048X1536 or even 1136X640. And there is not much to be gained from making the display hardware any thinner because the battery, hard drive and other components the now dictate the thickness which is already fairly narrow. Apple may have the right stance in not making display upgrades a major issue, but rather putting its innovation focus on useful apps, iOS benefits, higher efficiency through hardware/software improvements and optimization, and last but not least - slick looks. But even such a goal is only going to capture a certain user category, still leaving out a wide range of users preferring Android and MS Windows environment for professional work.

Meanwhile, semiconductor technologies are rapidly becoming very powerful, enabling high-performance processors and memory chips based on DRAM, NAND and NOR Flash - serving as the core for solid-state drives, various modules and multichip system solutions. These enable ever more sophisticated computing, storage and networking for enterprise systems as well as for such consumer products as mobile devices and cars. For mobile devices, they can add or enhance such features as bioinformatics, image/video analysis to obtain, for example, gesture recognition and network security. The companies in this space include Samsung, Micron Technology (NASDAQ:MU), Qualcomm (QCOM) and ARM Holdings (NASDAQ:ARMH). Apple already relies on partnership with Samsung in this space and it is possible that the partnership may even strengthen over time, either directly or through future mergers and acquisitions.

Samsung Goes Beyond Phablets

Samsung is a gigantic diversified company that covers territories beyond what overlaps with Apple, bringing approximately 30% of its current profits outside of the mobile device space (here). Having in-house semiconductor and LED manufacturing capabilities, it is also betting on its LED lamps becoming the choice for lighting and thereby capturing a large chunk of the expected global lighting market (here). According to South Korea's Korean Association for Photonics Industry Development (KAPID), their country will produce 18% of the global lighting market that is expected to reach $44.2 billion in 2015 (here). Samsung stands to capture a majority of this revenue. But they may soon come to the realization that LEDs are better suited for display or viewing applications and not for general illumination applications because of their inherent light distribution that concentrates immediately in front of the light source as explained in detail in my book (Understanding LED Illumination - here) with a new theory, simulation and experiments.

Aside from display and lighting products, Samsung can continue to manufacture and upgrade household appliances and other electrical products with its in-house semiconductor technologies, incorporating smart sensing and controls to provide remote operation, security and other management functions.

Investing Options

Apple and Samsung's businesses are both solid and should remain so for quite some time. I don't believe Apple and Samsung are necessarily interested in market cap appreciation. The rivalry between them is media hype from which Apple and Samsung don't have much to lose, but they stand to increase profits as consumers continue to buy their upgraded products. This is reminiscent of Microsoft in the 80s and 90s. Microsoft and its investors made it big then - but the stock had stayed flat for 20 years. While investors strut and fret over their favorite stock prices' stagnation, dominant companies as large as AAPL and Samsung are smart to stay hungry to only maintain their profits, making stock price appreciation a distant subsidiary issue.

Where does it leave investors? Many might think investors face a tough spot with Apple, providing hardly any opportunities for profits. But there are ways to still make money with this giant. The simple kind is receiving dividends and perhaps buying preferred AAPL stock someday, if that ever materializes. Neither of these provides substantial gain and they aren't meant to. However, good gains are possible through options and straddles. Options may be trickier since they are usually affected more by unpredictable market swings and timing. But a straddle could be a better bet for both AAPL and Samsung, choosing bands of reasonable widths. Going long or even short doesn't make good sense for Apple or Samsung. Both companies are is too profitable and valuable and the stock can pull back only so much. Taking long or short positions on AAPL with various call and put options would be quite risky given the market's unusual volatility in recent years.

As for Samsung stock, trading on the Korean exchange - I see it climbing somewhat higher in the upcoming year given it has trailed about 4.5% this year despite posting surging profits (here ). Its ADR could be introduced in the US as talked about by Samsung recently - and if it should materialize, the stock will have room to appreciate, particularly in the near term.

Author's Note: I started as a new contributor to Seeking Alpha with my first article published on November 1, 2013. Since then, I have written 1 per week and aspire to keep this pace, which effectively makes my contribution a "weekly column" if you will. My writing will primarily involve semiconductor lighting, display and electronics technologies that are not only continuously and rapidly shaping and growing important industries, but also offering unique opportunities and challenges for investors. I appreciate comments from readers and will do my best to respond in a timely manner. Thanks for reading.

Source: Apple And Samsung: Litigation, Competition And Partnership Are Just Business As Usual