The comprehensive patent lawsuit victory of Apple Inc. (AAPL) over Samsung (SSNLF.PK) is hard on Samsung and perhaps Google Inc. (GOOG) - both companies will have to do some serious rethink of the design of their physical devices and software.
Is it possible then, that Research In Motion Limited (RIMM) and Microsoft Corporation (MSFT) have sufficiently differentiated smartphone software that they can escape the hammer that Apple now wields over Samsung, Google and various Android-based smartphone brands?
If Research In Motion is not sufficiently differentiated, then it is basically toast - or should I say burnt toast, because it was already cooked as toast. If, on the other hand, its software is different, then its operating system might become a hot demand item. Since it has recently announced plans to license use of various of its technologies, the Apple victory could take interest in its smartphone software out of the cold and make it a hot item. It would probably need improvement, but if the core is non-infringing, that would be quite attractive to some who want to be outside of range of Apple's wrath.
Similarly, Microsoft, could be licensed to additional smartphone manufacturer's devices, if it is non-infringing. That would be very helpful to wider adoption of the Microsoft approach. If not, Microsoft will be injured - and Nokia Corporation (NOK) would be toasted more than it already is.
The implied market dominance and future market share increases associated with the patent victory in the US is huge. The stock will probably respond very nicely as a result. But, could this victory have within it the seeds of trouble?
It may well be that Europe could be a bit of a savior for Samsung, Google, and perhaps Microsoft. The European competition laws and commission is more aggressive than the anti-trust laws and enforcement in the United States. They might not be too happy with Apple owning the smartphone market. Within their own realm, they may force Apple to license its technology to others, or possibly interpret patents less in favor of Apple.
Then there's China. With its weak intellectual property rights enforcement, and desire to promote local businesses, it may not treat Apple so favorably. In addition, China may decide that it would be counter to its national security interests if its country was overly reliant on a dominant smartphone operating system out of the United States. In such a case, we could imagine China promoting a locally developed operating system that might copy any number of Apple patents to get the job done. That would be adverse to Apple.
Overall, there is a material risk that some countries may decide that it is not the best public policy or in the national security interest to allow too much concentration of smartphone software in the hands of a single company.
No tree grows to the sky, and every dog has its day. Apple is a fabulous story, and we own their stock and have all of their devices of every type; and love them dearly. However, its undisputed leadership and control cannot last forever. This court victory could sew the seeds of concern at government levels that could evolve into actions meant to level the playing field and maintain competition.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. QVM has positions in AAPL and MSFT as of the creation date of this article (August 24, 2012).