Most people think that Apple would definitely benefit from a potential ban on many of Samsung's "copycat" smartphones. But in the long run, Apple's "thermonuclear war" against Android would only make way for a more powerful competitor -- Microsoft (MSFT). Kind of ironic, isn't it?
The Rise and Fall of a Star?
Apple's stock price may have jumped by leaps and bounds over the past few years, but even that might not be comparable to Google's (GOOG) meteoric success with the Android platform.
Top Smartphone Operating Systems, Shipments, and Market Share, Q2 2012 (Units in Millions)
Q2 2012 Shipments
Q2 2012 Market Share
Q2 2011 Shipments
Q2 2011 Market Share
Windows Phone 7 / Windows Mobile
Source: IDC Worldwide Mobile Phone Tracker -- Aug. 8, 2012.
According to IDC, Android's worldwide smartphone OS market share grew during the second quarter of this year to a jaw-dropping 68.1%. That's compared to just 46.9% in the prior-year period. On the other hand, Apple's IOS market share fell from 18.8% in the prior year quarter to 16.9% this year. With Android gaining a lot of traction, Apple found it absolutely necessary to aim its legal arsenal against the largest Android smartphone maker -- Samsung.
How Is Microsoft Gaining From all This?
Well, as many of you might have guessed by now, the threat of litigation could drive Android smartphone makers such as HTC, LG, ZTE, and even Samsung to increasingly adopt an alternative platform. Since many of them are not experienced enough to develop an operating system of their own, they would have to use something that's already tried and tested. And this obviously puts Windows at the top of the list.
Moreover, Microsoft has cross-licensing agreements with Apple, so the use of Windows gives smartphone makers much needed legal protection from Apple. Samsung seems to have recognized this fact, as it hurriedly released the "Ativ S," a Windows Phone 8 device, even before Nokia had a chance to release the Lumia 920.
How Can Apple Possibly Lose to Windows?
Being an Apple-only platform, the iOS would not be able to significantly compete with Windows, as the company does not grant any other smartphone vendor the right to use its software. So once smartphone makers ramp up production of Windows phones, Microsoft would be better positioned to attract more developers to make more applications. More applications in the Windows ecosystem would make Windows phones even more attractive for smartphone buyers. Hence, that would result in a self-reinforcing cycle of strength, which could ultimately lead to Windows overtaking the Cupertino-based company.
A few months ago, IDC had predicted that the Windows platform would "outshine Apple's IOS by 2016." The rationale back then was that the increase in Microsoft's market share would get a major boost from sales of Nokia's Lumia devices, especially in emerging markets. But from the look of things today, I feel that this prediction could happen a lot sooner.
Moreover, if Microsoft considers getting into hardware mode through a potential acquisition of Nokia (NOK), or even Research In Motion (RIMM), the company could become an even more formidable threat to Apple. This is because Apple wouldn't be able to sue Microsoft as freely as it plans to do with many other Android smartphone makers at the moment.
In other words, Apple might be killing one giant, but it's just waking up another one.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.