Heavyweight Bout—Apple vs. Samsung

Heavyweight Bout—Apple vs. SamsungThe market for smartphones and tablets is extremely competitive and fierce. At stake are hundreds of billions of dollars, and it means riches for the market leader.

In California, we are witnessing a battle in the courtroom between Apple Inc. (NASDAQ/AAPL) and Samsung Electronics Co. Ltd. (OTCBB/SSNLF). Apple, the market leader in the global tablet market and second in the smartphone market, is suing Samsung for $2.5 billion. Apple claims the Samsung smartphones and tablets look and feel like the “iPhone” and “iPad.”

Market leader Apple suggested that, prior to the launch of the iPhone in 2007, “Samsung was making ugly devices and afterwards everything looked like the iPhone and the iPad.” (Source: The Daily Ticker, “Apple vs. Samsung: Is It the Trial of the Century?” Aug. 9. 2012.)

Scanning through Google images and looking back, I must say Samsung’s smartphones did appear somewhat ugly in 2006, prior to the iPhone, but had a slight makeover thereafter.

Yet what I don’t get is when is it illegal to look at a competitor’s design and mimic it without actually copying it? Yes, Samsung’s “Galaxy” and Apple’s iPhone look similar, but in my view, there are enough subtle design differences to make Apple’s allegation somewhat trivial. The fact is that Samsung had incorporated the rectangular shape into their smartphones prior to the iPhone.

The Samsung “Galaxy III” has a larger screen than the iPhone. The icons look similar but so do the icons on other smartphones, such as those on the “BlackBerry,” by Research In Motion Limited (NASDAQ/RIMM). In my view, I actually like the feel and size of the Galaxy (I own an “iPhone 4”) and may even consider buying one in the near future. But, when I’m looking at the Galaxy, the iPhone doesn’t cross my mind.

For Apple, it is a battle against its biggest rival, since RIM is essentially a non-player at this time. (Read “Research In Motion Had Better Be Right.”)

So what’s at stake?

Apple is market leader in the booming tablet market. The global market for tablets is estimated to rise to around $31.9 billion this year with over 100 million units delivered, according to Visiongain. By 2016, it’s estimated that about 360 million tablets will be sold, according to IHS iSuppli. Apple knows this, which is why there is a court battle, as the company wants to hold on to its market-leader status.

Samsung is the market leader and has a firm strangle-hold on the global smartphone market at around 44% versus 17% for upstart Apple, according to International Data Corp. Apple is the market leader in the U.S. with a 31% share versus 24% for Samsung, according to NPD Group.

It’s going to be interesting to see how the court developments work out, but in my view, the only reason why tablet market leader Apple is suing is that the company views Samsung as a real threat.

My opinion is that if a lesser company had a design similar to the iPhone, I doubt there would be a court battle.