Apple Inc (NASDAQ:AAPL) was in a great position to leverage a patent-infringement/licensing deal with handset maker HTC earlier this week, and it succeeded in securing a 10-year, $276 million deal with HTC to dismiss all current and future lawsuits and license its standard-essential patents. The deal would mean that Apple would get about $6-$8 per HTC handset sold, which runs on the popular Android operating system by Google Inc (NASDAQ:GOOG).
However, if you think Apple Inc (NASDAQ:AAPL) will have similar success with Samsung Electronics Co Ltd to settle their ongoing intellectual-property squabble, think again. In fact, one Samsung executive was quoted this week as saying that much. Apple Inc (AAPL) can bring Monty Hall into the room and it won’t matter – we won’t make a deal.
What is the difference with Samsung versus HTC? It’s mostly about market. HTC pretty much has no market, as its share of the smartphone handset market has been cut in half, from 11 percent to 5 percent, over the last year, so chances were decent that HTC would have taken on unsustainable legal fees fighting with Apple Inc (NASDAQ:AAPL) over the patents, that it likely was better off to make the deal it did, essentially handing over about $25 million or so per year in licensing fees.
However, with Samsung it is a very different story. Samsung has increased its market-share lead over Apple Inc (NASDAQ:AAPL) to where it owns about 35 percent of the market to Apple’s 17 percent. And with Samsung reporting about $6 billion in net profit this year – up more than 90 percent from last year – it is safe to say that both companies have the money and the fortitude to continue their court battles in several international courtrooms until an ultimate winner is decided. In other words, Apple (AAPL) investors like billionaire Julian Robertson of Tiger Management had better figure in legal costs into their assessment of Apple stock for the foreseeable future, because it’s possible these two companies will duke it out for years, and it likely will take more than one large award to call this off.