Apple Patent Win Puts Carriers in Driver’s Seat
The U.S. operators have long wanted to see a strong third player emerge to lessen their dependence on only two OSs, Android and iOS. This is something executives from AT&T Inc. (NYSE: T) and Verizon Wireless have stated in the past, even going as far as to defend Samsung in the patent wars. (See Verizon Defends Samsung Against Apple , Nokia's Third Ecosystem Starts With AT&T and CES 2012: It's Time for That Third Ecosystem, Microsoft.)
A trial may not have been the route they had in mind, but the Apple-friendly verdict could cause them to get more vocal in accelerating development of that third ecosystem. Jefferson Wang, wireless practice lead at IBB Consulting, says that Microsoft Corp. (Nasdaq: MSFT)'s Windows OS, and to a lesser extent BlackBerry 's BlackBerry 10, will likely be the beneficiary of the verdict as they're both relatively safe from the threat of Apple litigation.
"[The verdict] gives some of the diversity and decision making back to the carriers and OEMs," Wang says.
The operators have always given the handset makers and software providers requirements for handsets on their networks, but they couldn't force their hands on what to include on devices, Wang adds. Now, they'll likely be stricter about certain requirements and promote more diversity in their line up.
Wang says the new mentality will be, "Don’t just bring your portfolio with rectangular staples and reduce the feature set; do something different." And that goes for all OSes.
Of course, consumers in today's market want rectangular smartphones with big touch screens, so the line between differentiation and building the products that consumers will buy is a fine one. Indeed, that's what got Samsung tied up in litigation in the first place.
What's more, Android is the most popular OS for a number of wireless operators, including Verizon and especially T-Mobile US Inc. . That may not change based on this trial, but in next six to 12 months, Android handset makers may have to look at less eloquent ways of implementing certain technologies to skirt patent issues, Wang says. In the next 12 to 18 months, he says, they'll start looking at new form factors like dual-screens and wireless accessories to stay out of the courtroom.
Nomura Securities analyst Richard Windsor points out that product delays and higher research and development expenses are likely to result for handset makers targeting the U.S., meaning that this process may take even longer than Wang suggests. In the meantime, it's a good window of opportunity for that third ecosystem to begin chipping away at Android's dominance. (See Microsoft Sets a Windows 8 Timeline and RIM Hopes BB10 Roadshow Will Wow Carriers .)
"As Android and Apple tear each other apart, Microsoft has been waiting in the wings and is in a very good position to move in and entice users to switch from Android to Microsoft, as we have already seen that user loyalty is low," Windsor writes in a research note.
While the verdict was delivered Friday, fallout from the trial is far from over. Samsung is working to overturn the verdict and, if that fails, will most likely appeal it. A preliminary hearing on injunctions on Samsung products based on the verdict is scheduled for Sept. 20.
— Sarah Reedy, Senior Reporter, Light Reading Mobile