Companies offering Android alternatives saw various boosts out of the ruling, as investors considered the possibility that they might either snap up some of Samsung’s market share (after all, not everyone wants an iPhone), or might have the ability to license their product to other manufacturers spooked by the possibility of Android becoming a liability.
Count Microsoft (NASDAQ:MSFT), maker of the Windows Phone OS, in the former camp, and Research In Motion (NASDAQ:RIMM) among the latter. Both were seeing gains around 1% — though perhaps Monday’s biggest short-term winner was Nokia (NYSE:NOK), which surged 9% on belief it could claw some market out of the ruling.
The long-term impact of this ruling is, naturally, tougher to call.
Despite the angst about everything going Apple’s way and this being bad for the consumer because it will result in fewer choices, I suspect that ultimately, it’s going to turn out differently.
It might even hurt Apple.
Apple introduced a pair of game-changing devices — the iPhone and the iPad — that completely disrupted their markets and virtually killed off a number of former leaders (RIMM being a prime example). Apple has continued to churn out slightly improved versions of its devices, generation after generation, while many competitors have chased the same customers using devices that owe a lot to Apple’s design.
At the same time, the company has trimmed its product line. According to The New York Times, those two devices now account for 72% of its revenue (with the iPhone alone representing 60% of its profits).
By making it much more dangerous to ride its coattails, Apple might have provided the impetus to innovation that has been lacking among other smartphone and tablet manufacturers.
They aren’t going to simply give up on a market that consists of half a billion devices yearly and is growing at an incredible rate. Instead, they’re going to be compelled to offer something very different — something that appeals to consumers, while avoiding the entire Apple patent minefield. And the risk to Apple is that by pushing competitors to this extreme, one of them might come up with something as disruptive as the iPhone or iPad.
While Apple might well have an extended run of smartphone and tablet dominance (and corresponding profits), it might be playing with fire by forcing competitors to try leapfrogging the iPhone and iPad. Anything that legitimately threatens those two devices could result in Apple’s record run coming to, if not an abrupt end, a disappointing slowing.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.