Steve Jobs declared war on Google (NASDAQ:GOOG) and the Android phone makers, declaring he would spend every penny of Apple's (NASDAQ:AAPL) vast financial resources to stop them from copying the iPhone and iOS with Android-based devices. Yesterday, after a lengthy trial pitting Apple against Samsung, the jury declared Samsung guilty on a wide variety of patent infringements and awarded over $1Billion in damages to Apple. They also declared the infringements willful, which opens the door to triple damages for Apple. This is a huge victory for Apple, which protects their intellectual property and ensures that future products like the iPhone5 will be far less likely to be copied.
For Samsung, this is a major blow, wiping out all the profits for those infringing smartphones and more, and most likely forcing them to come to the table with Apple to settle on cross licensing fees for Apple patents. They should have done that in the first place, but Samsung refused to come to terms with Apple, and instead chose the risky play of going to court and taking the case all the way to verdict. That will go down as one of the stupidest decisions in the history of the technology business.
In the meantime, the real target here, and the one Jobs was mainly after, is Google. They cloned the functionality of the iPhone with Android, and then distributed it for free to all takers. They have no license agreement with Apple, and they pay no royalties to them. However, several Microsoft innovations were copied in Android, so Microsoft (NASDAQ:MSFT) went around and got license agreements from all the handset makers, and thus they receive a royalty for every Android handset sold. Google gets nothing, but freely enables others to infringe on Apple. It is a part of Google's general strategy to try and destroy their competitors with 'free' versions of valuable software, all funded by their ad-click cash cow. Steve Jobs and everyone else in technology have worked together to cross license technologies, create industry standards, and keep the whole ecosystem moving forward in a profitable way. For example, Microsoft has a smartphone license from Apple, and does not infringe with their current and upcoming Win phones. Only Google refuses to play, doing their best to undermine competitors in any underhanded way they can.
It is time for Google to pay the piper, and I can hear Steve playing that heavenly flute right now. Now that Samsung has been punished with the largest damage award in patent history, the other handset makers are all shaking in their boots, and they know that the main source of their problem is Google's Android OS. They will all need to make licensing deals with Apple, but expect Apple to refuse to do that unless and until Google also agrees to start paying for their crimes in the form of royalties to Apple. Expect to see a major upheaval in the smartphone business from all of this, with Apple coming out the winner.
Disclosure: I am long AAPL, MSFT. 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.