OEMs Quaking In Their Boots

by: Stephen Rosenman

The smartphone business just became less appealing for the original equipment manufacturers (OEM).

Pre-San Jose, you could manufacture iPhone look-a-likes to your heart's content.

That's changed. Apple (NASDAQ:AAPL) has teeth. Every Android manufacturer - HTC (OTC:HTCXF), Sony (NYSE:SNE), Huawei, and ZTE - has to be quaking in its boots. The Oh-My-God realization: We may be next.

And really, it's easy to see how Samsung (OTC:SSNLF) went so wrong. For the most part, the OEMs haven't been doing original for a long time. Theirs is a commodity business, not just in cell phones but thoughout the electronic device industry. Once a product hits the market, it's torn apart and copied by everyone.

It's become an epidemic. Look at the lack of PC variation. Except for the logo, notebooks all look alike. There's not a great deal differentiating a HP (NYSE:HPQ) or Dell (NASDAQ:DELL) or Toshiba (OTCPK:TOSBF) PC. Ditto desktops. Check out the television aisles at Best Buy: A Samsung looks like an LG or Sony (SNE). It's the way it's done. No wonder every smartphone looks like an iPhone. The OEMs had convinced themselves that copying the iPhone's look and feel was nothing more than adopting a new standard. Building your smartphones to match Apple's iPhone was just business as usual.

As for the intellectual property, enforcement? When did that ever happen?

Then came Apple v Samsung.

The verdict could bring new respect for intellectual property involving notebooks, televisions, handsets or any other device. Innovation scored a big victory in that California court room. This earthquake is going to have gigantic aftershocks, extending throughout the original equipment manufacturers.

Disclosure: I am long AAPL. 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.

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