What Patent Peace Looks Like

| About: Microsoft Corporation (MSFT)
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One of the more interesting facts to come out of the Apple (NASDAQ:AAPL) vs. Samsung (OTC:SSNLF) trial is the patent cross-license between Apple and Microsoft (NASDAQ:MSFT).

According to 9to5 Mac, Microsoft is paying Apple for use of its design patents but promising not to "clone" Apple products. Thus, there is the Microsoft Surface, a tablet with a keyboard that is based on Apple's thin tablet design but looks and works nothing like it.

Apple is offering this as part of its prosecution of Samsung, which is absolutely crushing Apple in the smartphone race, according to Gartner Group. In the second quarter of this year, Samsung reportedly sold 45.6 million Android phones, vs. 29 million iOS devices.

The bottom line is that Samsung now enjoys 21.6% of the mobile market, while Apple has just 6.9%.

The goal of Apple, in its trial against Samsung, is to force Samsung to make its Android phones so different from Apple's that they can't be confused, as a Microsoft Surface can't be confused with an iPad. Anything else, Apple says, is copying.

After Apple got its bite of that apple last week, Samsung is now up.

The trial makes for riveting entertainment, but the real question is whether it will deliver design daylight between Android and Apple, differences that will favor Apple over Samsung in the marketplace. It may do well do that, but it won't wipe out competition in the market. Google (NASDAQ:GOOG) has engineers, Microsoft has engineers, and Samsung has engineers -- and competition in both the phone and tablet markets is only going to increase, not decrease.

The winners will be consumers, who are already getting great deals on iPhones. The losses will be on margins for all players, and it would be wise if investors start turning more of their attention to the industry's after-market -- to sales at the "app stores" of the various players, rather than to patent litigation.

In other words, it's not about Apple vs. Samsung, but Apple vs. Microsoft, Apple vs. Google, Apple vs. Amazon (NASDAQ:AMZN), and Apple vs. the carriers.

Phones and tablets are slowly moving from being ends in themselves to being a means to an end. That is what patent peace in our time looks like.

Disclosure: I am long AAPL, MSFT, GOOG.