Apple's Victory Over Android - What Does It Mean?

| About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) and HTC have announced a cross licensing agreement according to a NY Times article. At issue here were several lawsuits against each other over various patents. In particular, Apple was suing HTC for copying aspects of the iOS mobile operating system.

Essentially, the fight was over Google's (NASDAQ:GOOG) Android operating system for the HTC handsets. But for Apple it is easier to sue the handset makers because they are the ones both providing physical products and whose profits can be most readily assessed, as Google products are indirect via embedded advertising.

On the subject of who is paying whom, the Times article states:

The companies declined to disclose the financial terms of the deal, though it is widely believed that HTC is paying Apple as part of the agreement.

The settlement is very important and can be seen as a victory for Apple for the following reasons:

  1. This is an important moral victory. Whatever the financial agreement may be, HTC is acknowledging that Apple indeed has valuable intellectual property rights that have been infringed by Android - that is to say, Android has copied iOS in at least some areas.
  2. This frees a lot of Apple resources, both financial, but more importantly energy. These suits have to be a tremendous drain on top management. This is one important step in alleviating the energy drain.
  3. Apple has raised the price for implementing Android handsets…

This third point is elucidated most clearly by always-interesting patent lawyer/blogger Florian Mueller of Foss Patents:

It is, however, already the 15th patent license deal involving Android to have been announced (there may also have been some secret deals). Each and every one of those deals reduces to absurdity Google's claim of Android being "free". There's no such thing as a free lunch.


Apple moves ahead in resolving issues that are distracting management from its main focus: innovation. This is a big plus for investors. While there is still the "main course" of the suits against Samsung that are still raging in courts around the world, this settlement minimizes the distraction.

Additionally, there is the issue of raising the cost of implementing Android. The question now is, will the real winner of this be Microsoft? (NASDAQ:MSFT) Will this drive more handset OEMs to the new WinMob 8?


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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.